|By Tania Valdemoro, The Miami
HeraldMcClatchy-Tribune Regional News
July 20, 2010--Coral Gables commissioners and The Biltmore Hotel agreed to a plan late Monday that will allow the hotel's operator to repay more than $3 million currently owed to city taxpayers.
"I'm really hopeful this is the start of a larger process that will attempt to ensure we have a sustainable relationship," said Commissioner Ralph Cabrera.
Commissioners said they hope the city and the Biltmore sign the agreement by the end of the week.
The city owns the 1926 historic hotel and its 18-hole golf course.
But Seaway Corp., which has operated The Biltmore Hotel since 1992, stopped paying the rent -- which is equivalent to 3.5 percent of the hotel's gross revenues -- in April 2009.
Gene Prescott, the president of Seaway Corp., has said The Biltmore has suffered tremendously during the recent recession.
The Biltmore's revenues dropped nearly 25 percent to $35 million in 2009 from $46 million in 2008. Its operating profits also fell to $3.7 million in 2009 from $8.2 million 2008, according to financial records the hotel shared with the city.
After the meeting, Prescott said the interim agreement, which the commission unanimously approved, "is what we can live with."
"This is an interim step," he added.
Commissioners have said failure is not an option.
The Biltmore closed in July 1990 after its previous operator, the Sovereign Group, went into Chapter 11 bankruptcy protection. It reopened in 1992 after Seaway Corp. bought the lease at auction for $20 million from Barnett Bank, one of the hotel's lenders.
The interim agreement approved Monday night is a short-term fix. In the long run, The Biltmore wants to renegotiate the terms of its lease with the city, which it assumed upon taking over the hotel in 1992.
Commissioners have said they do not want to negotiate a long-term lease until they see the results of an independent financial audit of the hotel being conducted by PriceWaterhouseCoopers. It is expected to be finished in August.
Under the terms of the interim agreement, the Biltmore would make quarterly payments of $240,000 starting the first quarter of 2011. The amount includes hotel rent and golf management fees.
The agreement further sets the hotel on a repayment plan of its back rent that would begin in July 2012. The Biltmore would pay $125,000 per quarter including interest at 3.25 percent.
The hotel further agreed to drop any potential possible claims regarding the $17 million it has paid in rent. Hotel officials had questioned whether Coral Gables had properly reinvested the money into the maintenance of the hotel in accordance with federal law.
Cabrera said the agreement would help The Biltmore get reimbursed by its lender for nearly $850,000 it has already spent to make some repairs to the facility.
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