Nov. 11, 2004 - The hard-fought settlement between the Royal Palm Crowne Plaza hotel and Miami Beach over construction costs may be in jeopardy, a development that could bring significant complications for the subsidized resort.

A year after both sides declared the dispute resolved, developer R. Donahue Peebles still has not signed the settlement agreement that allows the Royal Palm to delay rent payments to Miami Beach and convert part of the hotel into condominium units, City Manager Jorge Gonzalez said.

The deal arose after Peebles blamed the city for not disclosing structural problems at the city-owned Royal Palm site before he was signed to build a hotel there.

While Peebles has agreed to the terms, his lender, Union Planters Bank, wants more protections in case of a foreclosure, Gonzalez wrote in a memo.

Peebles told The Herald on Wednesday that he is hesitant to settle the dispute over the construction problems in light of the $12 million the Royal Palm contractor, Clark Construction, won against the hotel this year.

"Right now we're having some discomfort giving the city a release," Peebles said.

New York investors recently sued Union Bank to take possession of its Royal Palm loan in an effort to foreclose on it. But Peebles has said the Royal Palm does so well financially that the court actions -- which he is contesting -- would not endanger the business.

Gonzalez told commissioners Wednesday he had given Peebles until Dec. 3 to sign the documents or forfeit the deal. Gonzalez said Peebles expects to sign the documents before the deadline.

Commissioner Jose Smith expressed confidence the matter would be resolved.

"As recently as two weeks ago, it appeared as if the whole deal we had worked out was unraveling," said Smith, part of the delegation negotiating with Peebles over Royal Palm. "But I think we're back on track."

-----To see more of The Miami Herald -- including its homes, jobs, cars and other classified listings -- or to subscribe to the newspaper, go to http://www.herald.com.

(c) 2004, The Miami Herald. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail [email protected]. RF,