This week, the Coral Gables City Commission gave the operators of the Biltmore Hotel a final opportunity to pay back $5.5 million in rent and golf management fees before the commission declares the hotel in default on its 99-year lease of the taxpayer-owned property.
Mayor James Cason said, “We are giving them one last chance to come up with a plan that protects the city taxpayers’ interests or we would have to declare a default.”
The commissioners will make their final call on the issue by October 24. The issue at hand is how much rent the operator should pay in light of the economic downturn and high maintenance costs at the historic hotel. Twenty-eight months go, the Biltmore reportedly first told city officials it would stop paying its rent, which is equivalent to 3.5% of the hotel’s gross revenues.
Seaway Corp., the hotel operator, said most of the delay is due to the city. Allegedly the city waited 20 months for accounting studies before coming to the negotiating table in early 2011. However, after last-minute deal-making that took place early this week, the city of Coral Gables and Seaway kept negotiations alive. If possible, both sdes will head to mediation to work out a final deal and the process is expected to be finalized before October 24.
Seaway has agreed to allow Great American Life, which holds the mortgage on the property, to participate in the mediation. In addition, they have offered a $151,648 base rent payment for the fourth quarter of 2011. Howard Berlin, an attorney for Seaway, indicated to commissioners that they prefer mediation to alternatives.
“The Biltmore is 100 percent committed to resolving this issue. To declare a default would be unconscionable and legal gamesmanship. We are very sorry we are at this point,” he said.
The Biltmore opened in 1926 and survived the 1926 hurricane, Merrick’s 1929 bankruptcy and the Great Depression. During World War II, the hotel was an army hospital and for 20 years a Veterans Administration outpost which subsequently closed in 1968. The property was deeded to the city in 1973 in a move to save the nation’s historic landmarks. The Biltmore then re-opened in 1986 and is known to host a slew of presidents.
Source: Sun Sentinel