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Waldman Barnett files Lawsuit on behalf of Developer BH3 Against Delray Beach CRA over $75 Million Public-Private Project

Waldman Barnett is in Palm Beach Circuit Court to vindicate the rights of a developer client that was determined to improve the Delray Beach community in need of redevelopment of blighted areas, but instead has incurred millions of dollars while the Board of the Delray Beach Community Redevelopment Agency (“CRA”) has tried to pull the rug out from under them.

A complaint was filed on behalf of BH3 Management LLC against the Delray Beach CRA seeking to recoup those millions of dollars in damages, as well as revive a crucial project the CRA board wrongfully set out to derail.

Waldman Barnett co-managing partner Glen Waldman and partner Jeffrey Lam represent BH3.

The current plan for the mixed-use project, called Fabrick, includes 69 workforce/affordable housing units, a much needed and desired Publix, retail space for local merchants, green space, and other improvements. The footprint is 7.4 acres in the Southwest 600 to 800 blocks of West Atlantic Avenue, property owned and controlled by the CRA.

BH3 is a real estate investment and development firm with offices in Fort Lauderdale and New York City. Principals Daniel Lebensohn and Greg Freedman, and partner Taylor Levy all have longstanding ties to the area, as shown in recent years by their significant investments to spur reinvention of the West Atlantic District.

In March 2020, a much larger BH3 project first approved by the CRA was heavily impacted by the COVID-19 pandemic. This unforeseen event, referred to in law as Force Majeure, affected and delayed tenant negotiations (especially with Publix), building supply chains, and almost every aspect of the project. Despite this, the CRA Board refused to extend any deadlines contained in the parties’ agreement.

Still, BH3 persevered as it was dedicated to the project and the community. When nearby residents asked for a smaller project that wouldn’t gentrify the area, BH3 listened and responded by scaling down from the scope to an acceptable size. When COVID-19 hit, BH3 was also there for the residents handing out food packages and other necessities to help locals through those difficult times.

In December 2020, the CRA board approved the scaled-down plan, which had been blessed by CRA staff, but then, shockingly, withdrew its approval without explanation, rhyme, or reason in a January 2021 meeting. Although the City of Delray Beach tolerated delays in many other contexts due to the pandemic, the CRA board, composed of city commissioners and two appointees, arbitrarily declared BH3 in default for violating deadlines it could not realistically meet owing to COVID-19 and its wide reaching impact. The board gave BH3 30 days to cure the default, a deadline it knew could not be met.

“The CRA Board was never collaborative or supportive of BH3,” the complaint states. “Instead, they were always in attack mode against BH3’s endeavors, while misrepresenting BH3’s intentions and actions as developers and losing sight of the constituency they were elected to serve and the needs they were trying to fulfill at this most difficult of times.”

The lawsuit that Waldman Barnett filed March 5, 2021 demands, among other things, declaratory and injunctive relief and money damages for the CRA’s breach of contract and related actions. BH3 reserves the right to seek punitive damages and add a claim under the Florida Sunshine Law for off-the-record communications among commissioners.

The case, BH3 Management LLC vs. Delray Beach CRA, is featured in these publications: The Real Deal, South Florida Business Journal, Bisnow, Boca Magazine and Premier Global Realty, Palm Beach Post, and has been featured on WPTV and WFLX.
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