Already reeling economically from the COVID-19 pandemic, rampant real estate speculation and looming gentrification, residents and business owners in Miami’s Little Haiti neighborhood are now confronting a new source of worry and uncertainty: The purchase by developers of a significant slice of properties along its main commercial street.
Some 20 properties, including the iconic Churchill’s Pub live music venue that’s been closed since March 2020 and commercial buildings housing neighborhood stalwarts like Sonny Sounds, changed hands in one fell swoop over the holidays. It was a massive foreclosure auction of longtime Little Haiti landlord Mallory Kauderer’s holdings along Northeast Second Avenue. Sale proceeds are not yet published in public records online, but pre-auction asking prices for one group of 17 properties came to $18.5 million.
Many in Little Haiti fear the sale opens the door more widely to big-money redevelopment and accelerated gentrification as the neighborhood’s Haitian-American population shrinks and characteristic businesses like botanicas and bodegas struggle or disappear. The buyers have not publicly disclosed plans or intentions for the auctioned properties. Even some tenants say they’re in the dark.
Kauderer, a Miami Beach developer and investor, began assembling a portfolio of mostly commercial properties in Little Haiti in 2013. Though at least some of his properties were rundown or were cited for code violations, backers say he kept rents affordable for small, local Haitian-American business owners, even though his ultimate goal was to sell or redevelop.
“Mallory opened the doors and now that he’s having difficulties, it is widening the gentrification tunnel,” said veteran Haitian-American activist Gepsie Metellus, executive director of the Sant La Haitian Neighborhood Center in North Miami. “At this point, we can expect that people will buy and flip again and sell to other developers. That’s the financial trend, and we have no reason to think it’s not going to continue.”
Kauderer, who according to court filings had fallen behind on mortgage payments and real estate taxes when the pandemic forced several of his tenants to close up shop, tried to reorganize his business and stave off foreclosure by filing for Chapter 11 bankruptcy last year, but his lenders eventually prevailed. A U.S. bankruptcy court judge ordered the auction to cover nearly $8 million in debt owed by Kauderer, plus interest and attorney’s fees.
The auction happened Dec. 15, amid continuing litigation in Miami-Dade circuit court between Kauderer and some of his financial backers, whom he accuses of scheming to muscle him out of the Little Haiti portfolio.
“It’s a story of American greed,” Kauderer said in a brief interview.
Sixteen of the properties were acquired at the auction by those same backers, an arm of Midgard Group, a development and commercial real estate investment and management firm based in Fort Lauderdale.
Churchill’s, which closed during the pandemic amid a separate legal dispute over control of that business between Kauderer and another associate, was purchased at auction by Doug Levine, the founder of the Crunch Fitness chain, Kauderer said. Levine, whose Miami-based Big Move Properties owns and has redeveloped properties in Wynwood and Allapattah, did not respond to a request for an interview.
Kauderer said he thinks Levine intends to keep Churchill’s as a bar. He declined further comment on the loss of his Little Haiti properties on the advice of his attorney.
A Midgard representative also declined an interview request, saying the firm does not grant them. But in brief responses to emailed questions, Midgard representative Jamie Myhre suggested the firm has no plans afoot as yet for the Little Haiti properties. He said Midgard acquired 16 properties in two auction lots, and has already closed on the purchases.
Myhre also declined to comment on the pending litigation with Kauderer.
“We are assessing the current situation of the properties and future opportunities,” Myhre said in his email. “We have recently reached out to a number of tenants for additional input. We will be happy to share plans in the future as they develop.”
On its website, Midgard touts the fact that its holdings in what it calls “downtown Little Haiti” lie inside a federally designated opportunity zone that can mean big tax savings for investors who develop there.
Moving up and out
The ownership changes come at an especially fraught moment for Little Haiti, a once-vibrant immigrant enclave that dates to the 1970s, when Haitian refugees began settling in the neighborhood after fleeing dictatorship and economic turmoil in their homeland.
Neighborhood population and borders have been shrinking in recent years as successful Haitian immigrants move up and out of Little Haiti, leaving only the poorest behind. Meanwhile, small and midsized redevelopment has been eating into Little Haiti from Midtown Miami and a revitalized Miami Design District to the south, as well as from the north and west as developers controversially seek to rebrand those sections of the immigrant enclave as Little River — a historic name that had previously fallen into disuse.
Major redevelopment plans for Little Haiti loomed even before the pandemic struck.
In 2019, Miami commissioners approved a plan for a massive 18-acre high-rise mini-city in the heart of Little Haiti called the Magic City Innovation District following a prolonged legal and political battle. The project has yet to move beyond rehabilitation of several warehouses. The first proposed tower at the site, announced in 2021, has not broken ground though the city has been reviewing construction permit applications.
But as the economy rebounds and housing demand in Miami remains unabated, those still in the neighborhood fear the change of ownership of Kauderer’s properties will put the historic community in increasing danger of erasure. The pandemic only accelerated the downward trend as local businesses were forced to close, many never to reopen.
“It’s concerning,” said longtime Little Haiti activist Marleine Bastien, elected to the Miami-Dade County Commission last year, though her district doesn’t include central Little Haiti. “The level of anxiety in Little Haiti is very high.”
Sparring developers
Pandemic losses forced Kauderer into bankruptcy proceedings, according to a short narrative filed with his application in U.S. Bankruptcy Court in Miami. His company lost substantial rent revenue when several businesses renting space from him closed, the document says.
But his court cases weave a complicated chain of events and claims. In a lawsuit against Midgard, its Little Haiti Gateway affiliate and co-founder James Goldstein and in his federal bankruptcy filing, Kauderer claims the firm’s executives approached him in 2019 with an offer to invest millions of dollars to renovate and redevelop his properties in exchange for an eventual ownership stake.
They signed a series of agreements that Kauderer now calls “predatory” in court documents. He says Goldstein’s group promised to advance him nearly $2 million to catch up on mortgage interest payments. Kauderer says Goldstein also pledged to invest $5 million in building renovations and recruit investors to raise some $45 million for redevelopment, and at one point claimed to be in touch with a group of eager Texas investors.
In his filings, Kauderer now says he eventually realized that those investors did not exist, and that Midgard never advanced him most of the promised money. When his principal mortgage holder sought to foreclose in March 2021, Kauderer claims, Midgard executives undercut his efforts to renegotiate the terms and bought the loans themselves, eventually using control of the debt to force a sale of his entire Little Haiti portfolio at auction.
In a response filed in court, Midgard executives contend they never signed any legal documents obligating them to undertake a bailout, and that they never represented to Kauderer they had investors lined up. It was Kauderer who failed to repay money the firm advanced to him, the response says. However, the judge in the case recently denied a motion from Midgard to dismiss the suit or drop Goldstein from the case.
To Little Haiti activist and crypto-coin entrepreneur Nandy Martin, known as Captain Haiti for donning a colorful superhero costume to promote the neighborhood, the auction represents a big missed opportunity. After finding out about the scheduled auction shortly before it took place, Martin said he tried and failed to organize a pool of investors to raise money to buy at least some of Kauderer’s properties.
That failure, he said, adds to years of frustration for many in Little Haiti that the struggling neighborhood’s stakeholders have been unable to acquire property in their own backyard.
“I saw a unique opportunity for the community to build some equity, but I ran out of time,” Martin said.
Lacking city’s commitment
Activists and business owners now say inaction and some recent decisions by the city of Miami in Little Haiti have exacerbated their plight.
For one thing, long delays in activating the Little Haiti Revitalization Trust, created as part of a community agreement that paved the way for Magic City’s approval, has meant that $6 million — the sum of the first two promised contributions by the developer towards economic and housing redevelopment — sits unused in the public agency’s account at a time when the neighborhood needs the aid desperately.
City of Miami Commissioner Christine King, whose district includes Little Haiti, said a reconstituted trust is now gearing up to solicit grant applications from the community.
But Martin, the Little Haiti entrepreneur, said lack of action by the trust and the sale of Kauderer’s properties have only fed community distrust over the intentions of developers and city officials alike. While feigning concern over the community, they’re really only looking out for their own interests, he said.
“I’ve come to see these people are not serious. They don’t want to work with anyone in the community,” Martin said. “They come to you and pretend they want to work with the community, but they just want to backdoor you somehow.
“It’s a bigger story than the (Kauderer) properties. What leverage will we have on these developers if they don’t have good intentions to work with the community?”
Making things worse, the city last year abruptly closed one of the neighborhood’s cornerstones, the Caribbean Marketplace, and sharply curtailed activities and events at the adjoining Little Haiti Cultural Center, after firing the complex’s executive director last year. Locals complain there was little to no communication from the city as to the complex’s status.
The virtual cessation of activities at the center means remaining foot traffic along that stretch of Second Avenue, which came mostly from tourists and crowds attending regular concerts and events, has evaporated — and so has business, said Jean-Marie “Jan Mapou” Denis, a poet and playwright and longtime owner of Libreri Mapou, a bookstore and cultural center that’s a neighborhood institution.
‘Going down the drain’
He said it’s also called into question the future of one of Little Haiti’s signature annual events, the Little Haiti Book Festival, held every May at the Caribbean Marketplace and the cultural center. Mapou said he and festival organizers have gotten no response from city officials over their request to schedule the 2023 edition.
“It’s a cemetery around here,” Mapou said. “Things are really bad. You don’t see people anymore, the foot traffic we used to have. Everybody’s talking about it. Little Haiti’s going down the drain. If they kill the cultural center, that’s it for Little Haiti. That’s all that we have left.”
King, the city commissioner, said in an interview that city administrators have been reviewing policies at the cultural center following the old director’s firing and she expects it will be back up and running “within the month.” She pledged the book festival will take place.
Though Mapou owns the building his bookstore is in, several adjacent storefronts now belong to Midgard, including three shops long shuttered because Kauderer started to renovate before apparently running out of money. Last week, the city slapped code violation notices on the three closed stores and neighboring corner building, another Midgard purchase, that houses Sonny Sounds and a food market.
In an email, Midgard spokesman Myhre said: “We are currently in the process of dealing with the multitude of code violations on the portfolio acquired; they will not be ignored.”
Across the avenue, at a former laundromat Kauderer converted into artist’s studios and an exhibition gallery called The Laundromat Art Space, administrator Ronald Sanchez said he has met with Midgard representatives and is confident he will be able to stay.
“They like what we’re doing here,” Sanchez said, as he prepared for an exhibition opening this month by a resident artist, Claudio Marcotulli.
But at Sonny Sounds, a combination CD store, travel agency and notary public office that has occupied its space for more than 20 years, the owners worry they will be forced out by the building sale.
As kompa music blared from a speaker on the sidewalk outside, Magalie Joseph, a member of the family that owns Sonny, said they have been on a month-to-month lease — a common practice in Little Haiti — but just finished a full interior renovation at their own expense. And while they have kept up with rent payments, they fear an increase they can’t afford, she said. They hope to stay, but have heard nothing from Midgard, Joseph said.
“We have not been informed of anything,” Joseph said. “We just renewed the place a little bit. We spent a lot of money. We are trying to keep it alive. I hope they don’t kick us out. We are very concerned about this. We don’t want to go. We would not know what to do or where to go.”
Mapou, who complained that Kauderer neglected his properties, said he hopes Midgard will invest in renovations and draw new tenants to shuttered stores. But it’s hard for him to opine when no one has heard from the firm. At the very least, Mapou said, Midgard owes its tenants and the larger Little Haiti community an explanation.
“What I didn’t appreciate was Mallory buying buildings and closing them down, with graffiti all over Little Haiti. Some of them are falling down. He said he had a plan to redo them, but when? I am hoping these new owners will do so,” Mapou said.
“We will have to wait and see. They have to tell the community what they intend to do.”
