Developer buying KLA Schools building wanted contamination report disclosed, emails show

Weeks before closing the KLA kindergarten building on Friday for alleged health hazards, the new owner of the property in Miami’s Brickell neighborhood urged the seller to notify the school of problematic contamination studies conducted for the pending sale, according to court documents released Tuesday.

The email correspondence between lawyers for developer Harvey Hernández and seller Benzol Properties reveals the behind-the-scenes disputes on air quality and soil samples at the KLA facility this summer as an Hernández company neared a $50 million purchase of a site that includes the school and a dry cleaner.

Immediately after the deal closed late Friday afternoon, lawyers for 99 SW 7 Holdings LLC — the Hernández company that bought the real estate — locked up the KLA building and notified administrators they couldn’t resume programs after the Labor Day break.

“We believe the tenants, including KLA Schools, should be made aware of the levels of PCE on the premises,” buyer lawyer David Marko wrote in an Aug. 1 email to a team of lawyers representing seller Benzol in the pending transaction. PCE is a reference to a chemical used by dry cleaners that can cause health issues in high doses. “We request that Seller authorize Purchaser to provide a copy of the vapor survey reports to the tenants.”

Benzol declined, and cited a confidentiality clause in the sales contracting barring disclosure of documents related to the property inspections. “Purchaser is not authorized to provide a copy of the Vapor Intrusion Survey to the tenants,” Benzol lawyer Ron Noble wrote in an Aug. 5 email to Marko.

A judge on Tuesday ordered the documents to become public as he decides whether to reverse 99 SW 7’s closure of the property.

That fight may end up a moot point for parents and students at the exclusive KLA school, where pre-K tuition can cost $18,000 a year. On Tuesday evening, KLA administrator Julie Brooks wrote in an email to parents that “we are very close to securing nearby facilities to hold school for all of our students and hope to receive government approval on an emergency basis.”

The school has two buildings in the area where the company linked to Hernández, a Miami developer of residential and short-term rental projects, purchased the one-and-a-half acre property fronting the Miami River at 99 SW Seventh St. for $50.75 million. The KLA school for students up to the fifth grade sits across the street from the one the Hernández company purchased. That real estate is owned by a different company and the KLA school there remains open.

KLA is already building a new school facility nearby, and plans to move there later this year, ahead of its lease at 99 SW Seventh St. expiring on Dec. 31.

Before selling the prime real estate, Benzol allowed the Hernández company to perform tests on the premises and hired its own environmental consultant to do the same.

The Hernández company hired Environmental Property Audits in Miami for its test, and the engineer in late June found PCE levels in three air samples above what it described as standards established by the Environmental Protection Agency. The report also noted the testing wasn’t designed to measure the magnitude of contamination, but only the presence of potentially harmful chemicals.

In his Aug. 5 email, Noble wrote that the buyer’s report showed “very minor detections of PCE” that were far below workplace limits established by the Occupational Safety and Health Administration. Noble also questioned whether samples from a school closet were the best way to test air quality at KLA.

“Please be assured the Seller takes environmental regulatory compliance and human health and safety matters at the subject property very seriously,” Noble wrote. The seller’s own environmental inspector, GHD, wrote in an Aug. 31 report that air samples it took in the school found PCE levels there “did not pose an unacceptable risk or threat to human health...”

The Hernández company, 99 SW 7 Holdings, filed a sealed lawsuit Friday against Benzol, asking a judge to free it from the non-disclosure agreement and release the inspection findings to KLA. That litigation was also the vehicle for KLA to file its own injunction request Monday to regain control of its leased premises.

Circuit Court Judge Antonio Arzola on Tuesday afternoon agreed to waive the confidentiality agreement as it relates to health reports, and ordered the case unsealed. He also asked the three camps to work out an agreement allowing school employees to come back into the building while the larger issue of safety for children is resolved.

A KLA lawyer said the school wants to end its lockout immediately but isn’t asking the court to order the doors reopened to children.

“We’re not going to do that until we are 100% sure there is zero danger, and that it can be independently verified,” KLA lawyer Michael Tein told Arzola. “We want to be able to have access to our building ... without having to ask for permission.”

In the hearing, Benzol lawyers accused the owner of using false health concerns as a way to clear the development site.

“They think there’s some great health hazard here, which doesn’t exist at all,” Benzol lawyer Todd Legon said. “This was a ploy, in my view, by the new purchaser to try and get rid of this tenant because of some development deal they want to do down the road.”

A lawyer for 99 SW 7 denied the allegation, and said it had no choice but to wait until the deal closed to take action to protect tenants from potential hazards.

“From the moment that our client took title to that property, to this very moment, there has never been a child in that school,” owner lawyer David Marko told Arzola. “We cannot agree to allowing people into that school. ... We would obey a court order, but we feel it is imperative for us to articulate it’s a risk we are not willing to take.”

In a statement Tuesday night, Legon said 99 SW 7 was asking Benzol to oust the school itself ahead of the purchase over the alleged hazards, but that “my client refused to assist in the buyer’s attempt to force the school out prematurely.”

This story was originally published September 8, 2021 at 6:00 AM.