As Miami-Dade County’s real estate market went bust, vocational school maverick Ernesto A. Perez began looking south to scoop up properties in Homestead’s depressed downtown to open a new link in his chain of for-profit colleges.
Perez would soon discover two eager allies: Mayor Steven Bateman and his wife, Donna, a real estate agent.
Now, the mayor is under criminal investigation for allegedly pushing Perez’s project to build a university on city-owned land, for which he lobbied feverishly behind the scenes while publicly maintaining a discreet distance. Public records suggest Bateman badgered Homestead government staffers and manipulated the process in a bid to help Perez purchase the municipal properties in the historic-but-lifeless downtown area at a fraction of the appraised value — while steering Perez’s real estate transaction to his wife.
In the end, Perez, chief executive officer of Dade Medical College, won a bargain-basement option to buy 3.5 acres in the downtown area; Bateman’s wife got a lucrative business referral; and the mayor received at least 15 $500 contributions to his 2011 mayoral campaign from Perez and his associates. He won the election.
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As for Homestead taxpayers, they stand to receive less than 40 cents on the dollar from the land transaction.
Miami-Dade State Attorney Katherine Fernández Rundle said Friday that her office is investigating several allegations stemming from Homestead, including those about the mayor and his role on the Community Redevelopment Agency’s board, which approved the property sale to Perez’s business.
“We have been receiving numerous complaints from divergent groups in Homestead. We have been subpoenaing records and interviewing witnesses for the past several months,” Fernández Rundle said.
The Miami-Dade Commission on Ethics and Public Trust, which does civil investigations, has also sought public records from the city of Homestead regarding the same probe.
The land in question has mostly been vacant since 1992, when Hurricane Andrew destroyed many homes in the area west of Krome Avenue, downtown’s historic main street. Council members, who sit on the CRA’s board along with the mayor, enthusiastically embraced Perez’s vision for a four-year university, retail stores and parking garage on the vacant land. He had already opened a Dade Medical College facility in a leased corner building on Krome, and acquired two other nearby properties for a nursing school and medical diagnostic training.
But now the CRA board’s hopes of reinvigorating the area have been overshadowed by the state attorney’s investigation, which is focusing on the mayor’s alleged misuse of his public position for personal gain and his lack of disclosure about his wife’s real estate interests with Perez and Dade Medical. The wife represented Perez and the college in their purchases of other downtown properties, including a defunct five & dime store.
After the city’s land sale to Dade Medical was given preliminary approval, Bateman traveled last year with Perez to Tallahassee on a jet leased by Dade Medical to lobby the governor on major road improvements to the Krome Avenue area, near Perez’s proposed university.
Bateman served as chairman of the city’s Community Redevelopment Agency board in late 2011 when it approved an option agreement to sell the CRA’s property to Dade Medical for $328,000 — roughly one-third of its value as determined by an independent real estate appraisal. The board voted unanimously to finance 80 percent of the purchase price, at a 5 percent rate over 15 years, with a balloon payment after five years. Dade Medical had to put down 20 percent in cash and pay the commission to its real estate broker, who works with the mayor’s wife.
Public records show the mayor did not vote on the proposed sale of the CRA land. Whenever it was discussed, Bateman excused himself from the proceedings without explaining why he could not participate in them, which may be a violation of the state disclosure law. Before a vote, Florida law requires a public official to state his interest in the matter from which he is abstaining; it also requires the official, within 15 days after the vote occurs, to disclose that interest in a formal memo to the record-keeper of the proceedings.
During an interview at his City Hall office last week, Bateman said he did nothing wrong, called the CRA land sale a “fair deal” and stressed that he did not vote on it because his wife had other real estate dealings with Perez. He also said his wife wasn’t directly involved in the CRA transaction, and that her boss at Royal Palm Real Estate Services in Homestead represented Perez as the buyer’s broker. The sale has not closed, as Dade Medical College’s university project still faces city reviews.
“I didn’t want to be dragged into it,” said Bateman, who is in the construction business and was first elected mayor in 2009. “I never involve myself in CRA voting on projects like this.”
“There is no secret my wife works for him. There’s nothing illegal about that,” he said. “My wife is smart enough and honest enough to know not to mix the two” — her business and city politics.
Then the mayor added: “It was [Perez’s] decision to contact Royal Palm. I wasn’t involved. I didn’t talk to him about the CRA deal.”
Public records, including emails obtained by The Miami Herald, indicate otherwise.
In October 2010, Perez contacted the mayor by email and asked him about “several properties off of Krome that are not being used” and “if we might not be able to work something out?”
The following month, Bateman responded by asking Perez to provide the folio numbers of the properties that interested him and offered to set up a meeting between Dade Medical’s top executive and the city’s CRA director.
A Dade Medical employee sent the mayor’s administrative assistant an email with the folio numbers, which cover a two-block area west of Krome Avenue.
In January, the mayor’s assistant, Lourdes Lanio, contacted his wife, Donna Bateman, by email.
“Per Steve’s request, here is Ernesto Perez’ contact information,” Lanio wrote in the Jan. 24, 2011, email, listing his office number, cell number and email address.
The next day, the mayor’s wife emailed back: “Thanks for the info!”
Less than a week later, her boss at Royal Palm Real Estate Services, Roxanne Jeghers, contacted CRA Director Jordan Leonard by email to tell him that her client, Dade Medical, was “very interested in putting together an offer for the property we spoke about” on the phone.
After a series of meetings, Dade Medical submitted a Feb. 23, 2011, letter to Mayor Bateman and city council members with its proposal to buy 21 parcels of CRA property for $690,500.
On March 2, 2011, Dade Medical’s Perez made his first public presentation to the CRA board. But before the discussion got started, Bateman excused himself, saying: “I’m going to allow the vice chairman to chair the meeting,” according to an audiotaped recording. Then, the mayor asked City Manager George Gretsas to contact him when the CRA’s discussion of the proposed land deal was over so he could return for the next agenda item.
Perez told the CRA board: “I don’t come here looking for incentives.”
Vice Mayor Judy Waldman, who presided over the meeting, voiced the sentiments of the board when she declared: “I love the idea of the university.” But she and other board members were troubled by Perez’s proposed purchase price and that the CRA would be stuck with the broker’s fee — $32,947.
So, the members agreed to get an appraisal. And Perez agreed to pay the sales commission.
Despite his absence from that discussion, Bateman lobbied for the CRA sale and publicly promoted it.
In the mayor’s June 2011 column for a local paper, he lauded Dade Medical’s university project, saying the company plans a “major expansion” of its technical school and retail businesses in the downtown area, which already included a coffee shop and restaurant.
“Land that has been unused since Hurricane Andrew may now be the site of potential new development,” Bateman wrote. “Students and teachers require restaurants and other amenities, further adding to the revitalization of the area.”
Meanwhile, the appraisal commissioned by the CRA board came in with a value of $924,000.
As the summer wore on, Bateman grew concerned about what seemed to him a lack of progress on the CRA land sale to Dade Medical. “Can you update me on the Dade Medical College issue and whether or not we lost them?” the mayor asked the city manager in a July 7, 2011 email.
Months passed, and Dade Medical changed the terms of its purchase proposal.
On Nov. 8, 2011, the company’s broker, Royal Palm, sent the city an amended offer of $328,000 for 19 parcels of CRA land — reducing Perez’s previous offer by more than half.
The next day, Bateman called the city clerk to schedule a special meeting of the CRA board to discuss the latest proposal. The meeting took place on Nov. 16, but Bateman didn’t show up. The board’s six council members authorized the CRA staff to negotiate an option agreement with Dade Medical.
About one month later, the CRA board — minus Bateman — unanimously voted on approving the terms of the $328,000 deal with Dade Medical. Bateman, who voted on other agenda items, gave no explanation for excusing himself from the vote on the CRA land sale.
Flash forward one year: On Dec. 17, 2012, Bateman joined Dade Medical’s Perez and two other company executives on a chartered-plane trip to Tallahassee to lobby the governor on roadway improvements to Krome Avenue. The improvements, on a truck bypass road, would benefit the downtown area, including Dade Medical’s university project on the CRA land.
According to public records, the mayor was reimbursed by the city for his hotel and food expenses, but he did not disclose the trip as a gift on his financial disclosure form, as required by state ethics law. Nor did he inform his fellow CRA board members that he made the trip. Instead, meeting minutes show the mayor told the board that Dade Medical called him to say it had met with Gov. Rick Scott about the Krome Avenue bypass plan on the city’s behalf.
Then in February of this year, the mayor waived the traffic study that was required by law for Dade Medical’s university project.
The fact that a businessman of Perez’s stature took an interest in Homestead was remarkable in itself. He and his father, a retired physician, founded Dade Medical College in 1999, after they had started a medical diagnostic company earlier in the decade.
By the time he arrived on the Homestead scene, he had already opened four Dade Medical campuses in Florida. As his for-profit technical college expanded, Perez used the proceeds to shower hundreds of thousands of dollars of campaign contributions on local, state and federal politicians. And he also raised the college’s profile by partnering with public schools and sponsoring charitable causes, such as the American Heart Association.
Perez wowed Homestead officials with his new plan for a 25,000-square-foot university campus, parking garage and retail stores on the CRA land near Krome. To make his vision a reality, last year Dade Medical acquired the University of Southernmost Florida, an accredited four-year school based in Jacksonville.
Bateman described the plan to The Herald as a “Little Georgetown.” When asked about that description, Perez smiled and said his colleges are meant for working-class minorities.
Perez, who did not attend college, said he took a “nontraditional path” to becoming a corporate CEO. In his early 20s, he played in a heavy metal band, the Young Turks, whose rise was halted in 1990 by a sexual assault incident involving group members and a 15-year-old fan after a concert in Wisconsin. Perez eventually pleaded no contest to two misdemeanor charges and was sentenced to several months behind bars.
He bristled at the mention of this incident by Herald reporters, dismissing its relevance to Dade Medical’s business with the Homestead CRA. But in CRA board meetings, Perez was selling himself as much as his chain of colleges.
Dade Medical’s top executive scoffed at the notion of any conflicts of interest between the mayor, his wife and the college’s real estate dealings.
He defended the Homestead mayor and his wife as passionate boosters for their community, which has been transitioning for years from a rural farming outpost to a sunbelt suburb.
“I consider the mayor a friend,” Perez said at his corporate office in downtown Coral Gables, adding that he came to know him after he was elected in 2009. “He’s done great things for the city.”
As for the mayor’s wife, “she works as a consultant for us,” identifying properties for Dade Medical to buy. Among them: the former McCrory five & dime store and the property housing Lucky’s Pub & Grill on Krome Avenue. She also helped Perez’s bid to purchase the shuttered Edison Furniture building. “It’s for sale, but I’m not giving it away,” said owner Steven Stembridge, who turned down Bateman’s offer for the storefront.
Perez questioned why anyone would care about what he considers to be “nitpicking” ethical issues.
“Anybody who thinks this has anything to do with one thing or another is just looking for stuff,” he said.
“If there’s a criminal investigation, I hope they have a lot more than my friendship with the mayor,” he added, “because there’s nothing there.”
But then Perez said: “To tell you the truth, I could walk away from this deal.”
Miami Herald staff writer David Ovalle contributed to this report.