Biltmore Operator Seeks To Increase Profits At Taxpayer Risk & Expense, While Questioning Need For Public Process And Participation

Ariel Fernandez

Founder & Editor
[email protected]


Added to the National Register of Historic Places in June of 1996, the Biltmore has seen many peaks and valleys throughout its 96 year history.

The Biltmore’s first 16 years were storied ones. Hollywood elite, royalty, President Franklin D. Roosevelt and even the notorious Al Capone were guests at the luxury hotel.

In 1942, with the United States fighting in the second World War, the Biltmore became a military hospital. It remained so until 1968.

From 1968 to 1983, the hotel remained vacant and in disrepair. The City took over the property from the federal government in 1973 and it wasn’t until the early 1980s that the hotel underwent a $55 million renovation by the City.

In 1986, the City leased the hotel to Sovereign Group 1986 Group to operate the hotel. The lease was taken over by Seaway Corporation, the current operator, in 1992.

According to the Biltmore’s website, Seaway took on an additional $40 million renovation in the 1990s and early 2000s.

However, since then, the condition of the Biltmore has been of concern to many and forced many guests to find other accommodations due to the condition of the hotel. Families who frequently held stay-cations found themselves seeking hotels in other locations due to the lack of cleanliness and value for the stay at the Biltmore.

Government Bailouts

Since taking over, Seaway Corporation has counted on government financial support to run the hotel on many occasions.

In two cases it has been based on national crisis, such as a $500,000 deferment following the attacks on September 11, 2001.

The Biltmore Hotel received federal support during COVID-19. Through the Payroll Protection Program (PPP), the Biltmore received three separate loans totaling $6,581,100. (Loan 1: $4,434,800. Loan 2: $2,000,000. Loan 3: 146,300). In addition to these PPP funds, the Biltmore asked the City for additional reprieve for $177,547.35 in June of 2020. The latter was also requested by the operators of the Coral Gables Country Club and it was used as grounds for non-renewal of their lease.

COVID deferment came just two years after the June 12, 2018, City Commission authorization to redirect up to 50% of the Hotel’s rental payments towards capital improvements necessary to preserve the Hotel’s historic landmark designation. The cost to taxpayers over the course of the next seven years is $5,250,000. The City’s approval was based on an assessment that the Biltmore would embark on a new $10.5 million renovation. However, the Biltmore touted to media that the renovation was actually for $25 million.

Passing Insurance Risk To Residents

At Tuesday, March 8th’s Commission meeting, the Biltmore will be asking for a reduction of insurance coverage required by its original lease with the City. The question some residents are asking is, who will be left holding the bag in the event of a disaster? The short answer is taxpayers.

The matter first came up at the the City Commission meeting of April 10, 2018. Then Mayor Raul Valdes-Fauli voiced his concern over lower limits for Biltmore insurance, stating that “there are two things that go by the wayside when people are trying to save money. One is attorney’s fees and the other is insurance.”

At the meeting, the City’s Director of Labor Relations & Risk Management Raquel Elejabarrieta stated that, “the Biltmore property is not in the City’s statement of values, which means that the City does not insure the Biltmore. The Biltmore is insured by the tenants as per the lease that the City entered with the Biltmore.” Elejabarrieta added that the tenants “are responsible for obtaining all the property insurance and we sent the lease to our outside insurance consultant who reviewed the lease to ensure the insurance adequately insures the property and we have received a letter from him stating that it does.”

“Its our landmark/flagship property and we need to ensure that it is insured,” added Valdes-Fauli.

If the consultants in a pre-COVID era believed the insurance requirement for 2018 was adequate, what would the assessment be today, when the cost of construction is over 100% greater today than it was in 2018? Over the last six months alone, the cost of commercial construction has increased by about 40%. These numbers alone would require an increase in insurance coverage and not a decrease to protect Coral Gables residents from the catastrophic cost of rebuilding our historic Biltmore hotel in the event of a major hurricane.

However, City staff is recommending that the Commission approve the reduction from total cost of replacement to a maximum of $100 million. An industry expert consulted by Gables Insider, believed the cost of replacement of the Biltmore hotel would be well over $300 million.

The Commission will vote at the March 8th meeting on whether to approve the reduction in coverage.

Reason To Charge For Parking

The reduction in insurance coverage is not the only issue on the agenda at the March 8th meeting. Following weeks of illegally charging for parking at the hotel, Seaway is seeking approval for the Commission to continue charging for parking.

The item, which was not included in the initial version of the Commission agenda and only added after Gables Insider‘s publication of its Agenda Digest late last week, calls for the Commission to approve the signs already posted by the Biltmore without prior approval as they are, as well as their payment structure ($3 per hour or $24 per day).

According to staff’s memo to the Commission, “City of Coral Gables Officials on municipal business, Biltmore Golf course members and patrons, Biltmore Club and Fitness members, Biltmore executive office tenants, and all City of Coral Gables Garden Club personnel be exempt from payment” left off the list, Coral Gables residents.

It also stipulates that the operator will :ensure lighting is in accordance” to standards, make repairs to the parking lot and restripe. In exchange, the City will get $0 for the first two years of charging. If the operator is unable to recover the fees in two years, the City will waive another year of fees. From that point forward, the City will only receive 30% of parking fees.

The question whether they can charge for parking remains a mystery. The west parking lot, as it is known, was deeded to the City by the National Park Service and the Department of Interior. In the City’s agreement with the National Park Service (NPS) dated January 11, 1984, the NPS outlined how the lot can be used by the City. Gables Insider made numerous attempts to secure a copy of this agreement, but has been unable to secure a copy. Commissioners were not provided a copy of this agreement by staff either, even though they are expected to take a vote on the issue at the meeting.

The lot has always been documented as an “overflow lot” in the contracts with the City. The Biltmore’s primary parking is restricted to their parking garage, used by their valet service. Those with knowledge of the agreement explain that the lot must remain accessible to the public.

The Biltmore wants to charge for parking in order to address an issue they claim to have. Non-hotel patrons parking at the lot and taking up parking spaces.

However, in response to an email from City Attorney Miriam Soler Ramos informing him that the issue would be discussed at this meeting, the Biltmore’s Executive Vice President Tom Prescott stated that, “one overarching question, you mentioned this would be for the March 8th commission meeting. Does that mean it needs to wait until then? I certainly hope not, as that’s a tremendous amount of lost revenue (which is shared by the City and the Biltmore – remember, we’re sold out for most of this month with heavy groups’ presence). So can’t this be on next week’s meeting agenda so it can be ratified by then?”

This begs the question, is the reason for charging freeing up parking spaces or a new revenue stream?

Its also important to note, that contrary to Prescott’s assertion, the City will not share any income for at least two years.

Gables Insider reached out to Prescott who explained he would be unable to discuss any questions until after the Commission meeting.

Reimbursement

A condition the Biltmore has been fighting is the request made by the City to reimburse the illegally charged parking. This would be a condition of approval.

Prescott explains in an email to Ramos that they “do not have the ability to, nor do we see the logic of, refunding the prior payments given the time-lapse of those charges…in that the third-party credit card processor has since purged all such charged credit card numbers associated with those prior transactions (as is customary once they cleared, per applicable data privacy requirements). Additionally, since no enforcement was previously undertaken none of the license plates associated with the cars that parked in the west-lot were ever recorded; thus, we can’t go through that avenue to search for whom was there and for how long to determine any form of credit to be issued.”

However, Gables Insider visited the website for the provider. Under its link for businesses, it has frequently asked questions. One of them, “CAN WE REFUND A CUSTOMER?” The response is clear, “Yes, it is very easy to do online. These funds will be withdrawn from your account on the first of each month.”

As with all payment apps, this one also allows for you to set up an account to save your vehicle and card information.

So why not reimburse those being charged illegally?

Still Charging?

On Monday, March 7th, just one day prior to the Commission meeting, the Biltmore once again was charging for parking as reported to Gables Insider and the City by residents who submitted pictures of the uncovered signs. Accessing the app, Gables Insider confirmed the payment system was online and charging.

Blaming Residents And Asking For A Go Around In Exchange For Free Parking

In another email to Ramos, Prescott went after City residents, asking why a public meeting was necessary and states, “I’m a bit confused as to the issue here. It appears to me that a hand full of people are complaining simply because they want to maintain free parking for their multiple cars, which often displaces available spaces for paying guests of the hotel. What right do they believe they should be afforded, free parking (often times when they prefer not to leave their visiting family’s car in their driveway) is not a universal truth/benefit. And I can’t believe that because of a few complaints a city meeting needs to be called for this issue – how can those same voices be given any standing to meddle with our business, which we need to be free to operate in order to be successful? It’s also important to note that, all of our golf members & patrons, all city officials, all our fitness members, and all of our office tenants are not charged for parking in the west lot for any of their vehicles….and you may even recall that’s why I requested the license plates of all such applicable vehicles, which most including yourself have provided so there’s never going to be an issue for any of them.”

The question is whether the process was followed. A search of the agendas of the Parking Advisory Board shows that the issue was only brought up as an update at the last meeting. According to the agenda, there is no advisory opinion to the Commission from the board designated to advise on parking issues.

Charging for parking has the blessing of the City Manager, but as Prescott has clearly stated, he himself would not be affected by the fees as he and other “city officials” have been given free parking by the Biltmore.

The Commission will take a vote at the March 8th Commission meeting on whether to approve the paid parking.

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15 thoughts on “Biltmore Operator Seeks To Increase Profits At Taxpayer Risk & Expense, While Questioning Need For Public Process And Participation

  1. Many Biltmore employees were issued a “temporary” 20-30% salary DECREASE upon reopening June 2020. Two years later those salaries have not been restored to pre-pandemic amounts. Not the best strategy for employee retainment.

  2. Let’s be clear: Mayor Lago et alia have done the right thing on this issue and others BECAUSE the public blowback has forced them to.

    The second we stop being the watchdog over this Commission another foolish thing will be done.

    So, instead of “taking our hats off” to the Mayor and others let’s keep a wary eye on the foxes guarding the hen house. They are self-serving foxes who seem to have no moral compass.

  3. Most of the comments in the Gables Insider are against Mayor Lago.

    Today was different.

    At the commission meeting, I hate to say it, but Mayor and the commissioners came to the right decision on the City’s parking lot at the Biltmore Hotel.

    Also, at the Sunshine meeting late in the day, the only issue was the big bond for the parks. Again, I hate to say it, but Mayor Lago, along with commissioners Fors and Anderson, made the right decision.

    I take off my hat to them.

  4. Isn’t time to find a new operator? It is painfully obvious that the current operator lacks the resources to properly operate the hotel. It is like the owners of the Marlins. They will never be able to compete because of their financial limitations. The Biltmore will be second rate for the same reason.

  5. Here we go again 😳. I imagine l the conditions on the West Lot land grant was a public access grant. Perhaps akin to the Granada Good Course land grant. Most of the cars parking their are using the facilities in some capacity. So no, parking fees there make about as much sense as parking fees at the CGCC or Burger Bobs. In that same vein, the parking lot maintenance (as a public parking lot) should be the responsibility of the city (taxpayers). So if there are charges – 100% to the city so that proper upkeep can be done at a break even for taxpayers.

    And WTH on insurance. That’s a hard NO. The business (hotel) should be operated to cover all of its costs – including building maintenance, periodic modernization (standard at hotels), and insurance. We (the taxpayers) should not be subsidizing a private business.

    Looks like there’s a problem with the operator. I don’t know what kind of oversight or vetting the City has on private operators and lessee’s, but an independent review of the operators books seems needed to check its the financial condition. Further, the operator should be required to provide independently verified plans / budgets for property maintenance and improvements that seem to be have long ignored.

    As a property degrades, it becomes even more expensive to fix. Sometimes impossible (building collapse). It will ultimately be the taxpayer left holding the bag.

  6. Comments below show residents are aware parking situation is wrong.

    Yet, face facts: comments are not enough to correct it.

    Commissioners must be told DIRECTLY at meeting today. No pay for parking at the Biltmore, our public property! Must email, telephone, and voice our objections at commission meeting.

    If don’t put it directly in front of commissioners, we, down deep, are weak and must live under the double standard at City Hall.

  7. Are Gables Commissioners reporting their free golf memberships as income to the IRS?

    “Some businesses pay club dues for some employees. But if you pay club dues for an employee, this is considered compensation, even though you cannot deduct it as a business expense. You must report this compensation to the IRS, and the employee must pay income tax on this compensation.Mar 30, 2020”

  8. If this doesn’t beat all!
    -under insurance of a national landmark at the expense of the taxpayers in the event of a catastrophic event
    -charging parking fees on public land for the 100% benefit of the operator
    Perhaps, Mr Prescott and his operation of the Biltmore need to scrutinized ASAP!
    Thanks Gables Insider

  9. The offer of free parking to City officials as part of this fee scheme is a BRIBE.

    You cannot say to the Commissioners “Don’t worry, by virtue of your being an official you won’t have to pay what the mere peasants who live here and aren’t being bribed have to pay.”

    Of course this is a BRIBE.

    But this would only be the latest ripoff at the Biltmore. All City officials and employees AND ALL THEIR FAMILY MEMBERS GET FREE GOLF TOO!

    This violates federal tax laws as it is not being treated as income.

  10. Thank you for you excellent article pointing out how Gables residence have been excluded from access to public property via excessive parking charges. Given all the concessions the City has given this private corporation at the expense and detriment of Coral Galbes residences the City should demand that the Leasee extend compensating benefits to Coral Gables community members who have been footing the bill. These benefits would be: 1) Free parking when on Coral Gables owed lots; 2) Reduced parking fees otherwise; 3) reduced fees to the Health Club, if a resident; 4) Free parking while play golf on the public golf course; 5) reduced fees for dinning, club membership; and events, if a resident.

  11. The Biltmore must be in terrible financial shape if charging for parking is crucial to the sustainability of the hotel. Maybe there is a bigger problem! Maybe the management in place should find another place to
    work! Obviously they are not getting the job done. The
    majority of the people parking on that lot are spending money at the hotel or at other venues offered i.e golf, restaurant’s etc. Parking should remain free as it has been!

  12. Wow! Here we go again! Mr Prescott’s arrogance takes the cake! He is confused that the peasants, ie., the taxpayers could expect to have a say on how the City manages their money!!! Perhaps he misunderstood the staff, of course they did not mislead him to think that his request was a slamdunk.
    Why would he think that the City Manager would not acquiesce to his demands since he was being very benevolent and granting all the elected officials and the top management FREE parking in the parking lot that the taxpayers own? So, did I understand correctly that those using the Biltmore facilities, and choosing not to valet their vehicles would also get free parking? How dare the rest of us expect to get the same treatment?
    As to the insurance coverage, have any of the elected officials and their staff thought about what would happen if there were a major catastrophe? Do they really expect Prescott and his company to stay around and pay for anything above the covered amount? If they do, I’m sure that there may be someone ready to sell them a wonderful property in the Everglades or maybe the Statue of Liberty or the famous London Bridge!!!!

  13. Are Putin’s Russian oligarchs running The Biltmore or what?

    Folks, it’s time for the Gables Commission to be infused with new blood so nonsense like this stops!

  14. CM Iglesias is always looking out for himself. He won’t have to pay for parking when he meets with lobbyists who can grease his way into his ultimate destination, County Hall. He amasses pensions like Carlos Jimenez did.
    Let’s not forget the historic building that collapsed at the Biltmore for lack of maintenance, by contrast.

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