Can Coral Gables Afford the Biltmore Anymore? The Answer Seems to be No!

All of the information on the back-and-forth between the City of Coral Gables and the managing company of the Biltmore Hotel has raised a very fundamental question:

Can the City of Coral Gables and the taxpayers of Coral Gables keep paying for the hotel?

Isn’t it time for the City to think about the real future of Coral Gables, rather than committing its taxpayers to more and more taxes to keep up this business.

Another good question:  Is the Biltmore Hotel truly a viable business?

In the past decade rampant consumption, product of a false and temporary prosperity engendered by a property bubble, has now withered away with  lower property values (household ATM machines), lower incomes, unemployment, a stagnant economy and pubic deficits to finance the debts of a failed Wall Street.  Under these circumstances the Biltmore Hotel will never return to times of prosperity because people cannot afford a luxury hotel to the previous extent.

Either taxpayers will have to keep subsidizing the hotel (i.e., subsidize the rich clients of this hotel) or the City should admit that it can no longer afford this luxury.  To negotiate a new contract with the hotel in which taxpayers have to pay the true costs of the hotel is not a good solution, because the economy will not return to the good times of the past decade.

Maybe the Biltmore Hotel should be turned into a museum and convention center or be shuttered.  Hopefully, our Commissioners and the Mayor will think beyond their own term limits and come up with a solution that is fair to all Coral Gables citizens.

About Stephen E. McGaughey
International consultant in financing development programs and projects

One Response to Can Coral Gables Afford the Biltmore Anymore? The Answer Seems to be No!

  1. The citizens of Coral Gables do not and never have paid for the Biltmore. For the past 18 years management has lived and worked alongside the citizens of Coral Gables and elevated their most treasured monument to a world class hotel. We have spent over $60 million for rehabilitation and restoration, $36 million has been required for repairs and maintenance and more than $17 million has been paid to the City as “rents”. Moreover, in a letter to the City dated, May 12, 2010, the Department of the Interior has stated that “expenses relating to the property’s repair, rehabilitation, restoration, and recurring maintenance requirements should be paid before any excess income is realized” bringing into question our rent obligations.

    The Biltmore is a success story; a federally designated National Historic Landmark building, a world class hotel, a meeting place for the residents of Coral Gables and world travelers alike, and a source of pride for the entire South Florida community. The Biltmore is a place of direct employment for over 600 (and another 350 indirect), and has an estimated total economic impact of $111 million annually. Additionally, $6 million in state and local taxes and $10 million in federal taxes are generated by the Biltmore.

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