Founder & Editor
Since our founding, Gables Insider has prided itself in providing in-depth information to you about issues that are affecting our community.
Over the last two months, a lot of information has been circulating about the Coral Gables Country Club, the current tenant and the potential plans for its future. Many of you have reached out about our silence on this issue. The fact is, getting all the details has taken time, but here are the facts we have been able to confirm regarding the situation, in chronological order.
On June 6, 2009, the City of Coral Gables entered into a lease agreement with Coral Grand, LLC for the management of the Coral Gables Country Club. Coral Grand, LLC is owned by the Di Donato family who run several banquet halls and restaurants in Toronto, Canada. The lease, which was amended in April of 2010 due to delays in the possession date, called for $840,000 in initial capital investment and $772,000 in improvements to the facility. Coral Grand would pay a monthly base rent at a starting scale of $20,000 plus a 6% of gross revenue in excess of $4 million.
Second Amendment: Pre-opening Damages
In September of 2011, a second amendment was made to the lease following damages to the roof of the country club through “negligent performance of the work done” by a contractor retained by the City. Coral Grand released the City of responsibility or liability.
Third Amendment: Air Conditioning Replacement
On May 28, 2013, a third amendment is made to the lease agreement, where Coral Grand agreed to replace a Carrier air conditioning unit on the roof of the building.
Unpermited HVAC Work
On December 19, 2019, the City had consultants visit the Country Club to begin exploring the replacement of the roof. According to the consultants, they found unpermitted HVAC work had been done by Coral Grand. Code Compliance cited Coral Grand for the violations. The issue was not formally resolved and a final inspection was not completed until September 10, 2020. Not only was there unpermitted work, but Coral Grand was also required to remove accumulated debris from the roof.
First Letter of Default
On April 20th of 2020, Coral Gables’ former Assistant City Manager, Ed Santamaria, sent Coral Grand a letter of default, stating that “the Tenant has failed to pay rent for April 1, 2020 as required under the Lease.” This was a month after the onset of the COVID-19 pandemic in South Florida. Seemingly understandable. Gables Insider reported on Coral Grand’s financial troubles and inability to pay due to COVID-19. However, we were promptly contacted by Anthony Di Donato who asked for a correction, as he explained that, “We do not have financial trouble, we are however trying to be fiscally prudent and we just don’t expect our ballrooms to be filling up anytime soon.”
As the COVID-19 pandemic began to take a toll on businesses throughout the country, the federal government created the Payroll Protection Program (PPP). A part of the CARES Act, the PPP was in place to help businesses keep their employees on payroll and ensure every day Americans continued to receive a paycheck. Some businesses were forced to shut their doors, as the funding took long to receive and many just were unable to get enough funding to keep their doors open. The program allowed for companies to apply for forgivable loans amounting to 2.5 times their monthly receivables.
On April 28, 2020, Coral Grand was issued a $310,477 PPP loan, which was then forgiven, not requiring that the loan be repaid to the federal government. While the money was dispersed within five business days under the program, Coral Grand did not make rent payment to the City until May 25, 2020.
Second Letter of Default
On July 30, 2020, the City sent Coral Grand a letter of default. In the letter, the City explains that the “tenant has failed to pay Percentage Rent for the periods of October 1, 2017 – September 30, 2018 and October 1, 2018 – September 30, 2019 due on November 14, 2018 and November 14, 2019 respectively, in the total amount of $43,572.64 (the “Past Due Rent”), as required under the Lease.”
These two periods were pre-COVID-19 and did not fall under any financial hardship periods.
Surprisingly, even though Di Donato claimed they had no financial troubles, Coral Grand continued withholding deposits from nonprofits. Commissioner Jorge L. Fors, Jr. stepped in on behalf of one of these, the Coral Gables based GENES Foundation. (Page 1, Page 2). The foundation, created in honor of, Emilio, a young student at St. Theresa Catholic School who had died, had made a deposit of $7,000 for an event at the Country Club. Coral Grand did not return the foundation’s deposit, instead instructed the foundation to seek an entity interested in taking over their place. The new entity would have to agree to the set of terms laid out by Coral Grand. Following a failed attempt to secure a replacement, St. Theresa Catholic School stepped in and paid the foundation its $7,000 deposit and held an event at the Country Club.
Fors had also spoken on behalf of Friends of Gables High, an organization of Coral Gables Senior High School alumni seeking to raise funds for repairs to the school. They had placed a $6,000 deposit for an event.
The City of Coral Gables also had scheduled events with $8,700 of tax payer dollars in deposits. As of today, the City has only been partially been refunded some of our tax payer dollars by Coral Grand.
Fourth Amendment: Payment Plan
A fourth and final amendment to the lease agreement was made on January 22, 2021, at the request of Coral Grand due to their inability to pay. “The Tenant’s operations have been affected more significantly than other tenants by the COVID-19 health emergency and designated Miami-Dade County business closures given that most of its revenue derives from operating as an events/conference venue; Tenant acknowledges that Tenant is currently in default under the Lease for failure to pay Rent (as defined in the Lease) due on August 1, 2020; Tenant has requested and Landlord has agreed to modify Tenant’s obligation to pay Rent by deferring the payment of full Rent owed for the months of August 2020, September 2020 and fifty percent (50%) of Rent owed for the months of October 2020 through December 2020 in the total amount of $95,650.31.”
Insurance Claim Denied
In January of 2021, Coral Grand made an insurance claim to McLarens, the tenant’s Commercial Property insurance company. McLarens conducted an investigation of the reported damage. McLarens’ response “Under the circumstances Underwriters, respectfully denies coverage of this claim.”
In its inspection report, McLarens claims that the “property damage which occurred, existed, or commenced prior to the effective date of this Policy will be deemed to have happened prior to, and not during, the term of this insurance.”
Under its contract with the City, “Whenever the Premises, or any part thereof, (including any Furnishings and Equipment furnished or installed in the Premises) shall have been damaged or destroyed, Tenant shall promptly make proof of loss in accordance with the terms of the insurance policies and shall proceed promptly to collect or cause to be collected all valid claims which may have arisen against insurers or others based upon any such damage or destruction. Tenant shall give Landlord written notice within forty-eight (48) hours of such damage or destruction.”
McLarens’ letter implies damage had occurred and not been reported. The City also had not received any notice of damage from Coral Grand.
As the City mentioned in an email to Coral Grand today, “the nine-month roofing project delay affected the contractor’s procurement and increased the eventual project cost due to the materials and labor cost increases that occurred during this delay.” An issue that has cost additional tax payer dollars with the COVID-19 related increase to the costs of labor and supplies required for the roof replacement.
The City sent Coral Grand a letter informing them of the City’s decision not to renew the lease on March 16, 2021. In its letter, the City outlines that Coral Grand had the option to renew if “no event of default by Tenant occurred under the Lease during the last two Rental Years (defined in the Lease) of the initial term of the Lease. On April 20, 2020 Tenant was notified by Landlord that Tenant had failed to pay rent due under the Lease for the month of April 2020 in violation of Section 29(A)(1) of the Lease. Landlord’s records indicate that payment of such rent was not made until May 25, 2020.”
However, the default during COVID-19 was not Coral Grand’s only violation.
The letter goes on, “Tenant has the obligation to promptly make proof of loss claims in accordance with the terms of the insurance policies in the event that the Premises, or any part of the Premises, has been damaged or destroyed. Tenant also has the obligation to provide Landlord with written notice within forty-eight (48) hours of such damage or destruction. Landlord’s records indicate that during the term of the Lease there have been numerous instances where the Premises has been damaged, including but not limited to, damage to the walls and floors of the Premises. Tenant did not timely notify Landlord of this damage within the time parameters set forth in the Lease, nor did Tenant timely make an insurance claim for these damages as mandated by the Lease, which has resulted in further damage/destruction to the Premises which could have been avoided had Tenant acted in a timely manner. Landlord’s records also show that Landlord made numerous inquiries to Tenant regarding the status of insurance claims which were either not responded to or not responded to in a timely manner.”
Coral Grand was asked to vacate the premises by September 30, 2021.
Following the notification to Coral Grand of the City’s decision not to renew their lease, the City started an RFP Process on April 19, 2021. The RFP required for the new tenant to at minimum: “Make an initial facility improvement investment of no less than $4,500,000; agree to a base rent of $360,000 per year, escalating at 3% for each leasing year thereafter; and propose percentage rent participation based on gross revenues. The city would consider an initial 15-year lease term with two additional 5-year options to renew, and proposals would be accepted through May 24,2021. The project was extended on three separate occasions and finally closed on June 28, 2021.”
The City only received one response from Barreto Hospitality, the same entity that had submitted a bid for Burger Bob’s. Coral Grand “did not participate since they cannot be selected as they have failed to perform under the terms of a previous contract with the City.”
On June 23, 2021, Coral Grand and the City reached a settlement agreement that would allow for them to continue managing the Country Club through April 30, 2022. Part of the agreement revolved around the cancelled events. “Tenant shall give priority to those events for which deposits were previously received but were cancelled due to the COVID-19 pandemic. It also adds a clause requiring a refund of 70% of deposits for groups who had scheduled events cancelled due to COVID-19 and had placed deposits, but choose not to hold at the Country Club. The agreement included a list of the events, which included events by nonprofits like the United Way, Camillus House, Friends of Gables High, the Jackson Health Foundation and the Parks Foundation of Miami-Dade County, as well as 13 weddings.
The agreement was signed by both the City and Coral Grand, which had legal counsel.
On September 23, 2021, Coral Grand held a town hall meeting for the community. In its invitation, they state that they “have asked to meet with the city, who will not hold discussions or negotiations.” However, the settlement is already in place. Negotiations after the fact would be at tax payer expense and only serve to negate the settlement agreement, which had provided Coral Grand an extension of seven months to their lease.
Here are some of the claims being made by Coral Grand:
- There will be a lengthy closure to the Country Club: While Barreto Hospitality was proposing a lengthy closure due to over $4 million in renovations, the Commission, at the September 21st City Commission meeting, stated that it would not allow for a lengthy closure.
- A large restaurant is coming: The Commission also made it clear that a large restaurant would not be coming to the Country Club, as it would not approve it.
- The Barreto Group is trying to forcefully take over the Country Club: Although they were the only group to submit a proposal, Barreto Hospitality “was found to be non-responsive, and the RFP was cancelled.” There is no current proposal in place to take over the Country Club after April 30, 2022.
- The Country Club is not making Coral Grand any money: A financial audit is underway to analyze the finances of Coral Grand, to ensure the City has been properly paid its 6% of gross revenue.
- The were coerced into signing the settlement agreement: Coral Grand has made claims that it was coerced into signing the settlement agreement with the City. However, they themselves have confirmed to Gables Insider that they had legal representation at the time.
The City has stated that it has found Coral Grand to have several code violations and received complaints that have been reported about Coral Grand. A search of a list of complaints yielded the following:
- “Replacement of A/C units without approval and a permit.” (as mentioned above).
- “Surrounding area at the country club not being maintained. took photos, and sent to PS landscaping.”
- “Went with and assisted Ofc M Kattou to inspect concerns brought up by complainant about said location.”
- “Complaint of coconut palms not being maintained. Generated from PS and sent to CE. I spoke to Anthony, the Operations manager for Coral Gables Country Club. He stated he was unaware he was responsible for these trees. He stated he would try and have someone out by Monday to clean them up. I will re inspect.”
The City has also shown concern over other businesses being run out of the Country Club. A search of Sunbiz, Florida’s business registry, shows at least one other business currently being run out of the location, CGAC GP, INC., and several others that are now inactive.
Watching the community rally behind longtime staple of the Granada Golf Course, Burger Bob’s, Coral Grand’s representatives have been seeking to link themselves with Burger Bob’s. However, it is important to note that the situation with Bob’s, as first reported on Gables Insider, was a completely different situation.
We have never shied from shedding light when the City has done wrong as was the case with Bob’s, but the same cannot be said about the Country Club.
In the case of Burger Bob’s, Gables Insider was able to uncover a deal that was being worked on behind the scenes and outside the City’s code. An agreement that cost the City thousands in outside counsel was drafted without the benefit of a formal RFP. Following the community uproar, Bob’s lease was extended through year’s end and an RFP process was started.
In the case of the Country Club, the City followed the proper steps by informing Coral Grand of its default and the City’s intention not to renew. The City started a formal RFP process requesting proposals from potential tenants. They then worked out a settlement to allow Coral Grand to continue serving through April of 2022, at Coral Grand’s request.
What Happens Next
Coral Grand has been trying to paint a doom and gloom picture of the future of the Country Club. However, using Barreto Hospitality’s proposal, which is no longer on the table, to paint a dark picture for the future is far from factual.
Yes, there was a proposal that would have brought a lengthy closure, over $4 million in renovations and a large restaurant. However, the City has informed residents that the proponent, “has not been ‘regularly engaged in the business of providing the services described in [the] RFP for a minimum of five (5) years’ as required by Section 3(A)(1) of the RFP.” As such, the City has not accepted their proposal.
The City is considering its options for the future management of the Country Club. As the Commission discussed at the September 21st meeting, one potential is that the City’s Community Recreation Department take over the operation of the Country Club on May 1, 2022. Although not ideal, the City believes this could be a potential solution, even if temporary. The City has over six months to pave the path forward, and the Commission has agreed to do so with the input of residents.