CORAL GABLES (CBSMiami) – The legendary Biltmore Hotel in Coral Gables will not default on its 99-year lease with the city. According to CBS4 News partner The Miami Herald, the operator of the Biltmore Hotel, Seaway Corp., and the city of Coral Gables have agreed in principle to a deal in which the company would repay taxpayers $5.5 million in overdue rent and golf management fees for the historic city-owned hotel.
Barring any last-minute complications, members of the Coral Gables City Commission could approve a settlement before mid December to resolve the longstanding dispute over rent and the future preservation of the hotel, which has cost Gables taxpayers millions since April 2009.
The Seaway Corp. has operated the Biltmore for 17-years and honored their obligation to pay rent to Coral Gables, and to pay for upkeep of the facility. Nearly three years ago however, Seaway decided they were not contractually obligated to pay so they stopped.
The issue was how much rent Seaway should pay in light of the economic downturn and high maintenance costs at the hotel.
Seaway has argued that Coral Gables needs to reinvest $17.5 million in rent it has received since 1992 into the federal landmark, a position the city disagrees with. Over that time, the company said it has spent more than $60 million in capital improvements and another $40 million to repair and maintain it.
The city has struggled to balance its budget since 2009 without the rent money from the Biltmore. This year, Coral Gables is counting on $1.91 million from the hotel.
The Herald states a key issue settled in the deal is the rent. Seaway will repay more than $5 million in overdue rent, $500,000 a year plus 2.5-percent interest starting in July 2012. Base rent will increase from $800,000 from $600,000 a year and the base rent will increase by $50,000 a year for the life of the lease, up to 65 years. Seaway will also pay Coral Gables $650,000 in outstanding golf management fees.
Commissioners must still vote on whether or not to approve the deal.
The Biltmore opened in 1926 and survived the 1926 hurricane, a 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.
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