Coral Gables Watch

City Not Investing in the Biltmore’s Preservation. Taxpayers Take Another Hit.

Thanks to the article by Tania Aldemoro of the Miami Herald:

Seaway cited a May 12 letter from Daniel Wenk, deputy director for the U.S. Department of the Interior, which oversees the Biltmore because it is a national landmark. The federal government deeded the property to Coral Gables in 1973 to preserve it.

“Expenses related to the hotel’s repair, rehabilitation, restoration and recurring maintenance requirements should be paid before any excess income is realized,” the letter stated.

The Biltmore contends its rent is “excess income.”

The city disagrees.

Coral Gables City Attorney Elizabeth Hernandez wrote the National Park Service in June, saying the city “used the excess rental receipts from the Biltmore for public historic preservation, park or recreational purposes.”

The city spent $11.6 million in 2008 and $13.4 million in 2009 for those purposes, according to a June 2010 report from the city’s independent auditors, McGladrey & Pullen.

On Wednesday, Hernandez said she could not say how much of that money went to the hotel.

The future of the city of Coral Gables earning income from the Biltmore is in question.  It seems that the city should have used its share of the income to maintain the Hotel to high standards.  This means less money for the city’s own public historic preservation according the of City Attorney who states that is where the money went.

It doesn’t seem to make sense that the Federal Government would allow the city to use the hotel’s income to pay for its own “historic preservation, park or recreational purposes” that did not include first fixing the hotel; it should first do the upkeep of the Biltmore and if there is any money left over the Federal Government could care less where the money went.

The city has delayed rental payments owed by the Seaway Biltmore, Inc. until next year and at the same time the city will negotiate a new lease.  The new lease would easily be negotiated in favorable terms to tacitly include these delayed payments.

What we are seeing then is that the city is in fact forgiving millions of dollars in rent due under the formula (now being covered by the taxpayers), with a more favorable contract for the Biltmore later this year and a new formula that will de facto dispense with the old payments due by the hotel.

All of this suggests that neither the Biltmore Hotel management nor the city of Coral Gables believes much in the future of the Hotel.

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.