Week of October 16, 2008
| Hyatt, Miami have until June to sign a deal for hotel takeover of Knight Center By Yudislaidy Fernandez<02 >The Hyatt and City of Miami have until June to sign a deal for the hotel giant to take over the downtown Knight Center complex by January 2010, city and hotel officials say. The deadline is in an agreement the city and hotel signed that requires the hotel to pay $2.7 million for cooling system repairs to the complex. Under the agreement the city commission approved Sept. 25, Hyatt Equities LLC — Chicago-based management offices for the Hyatt Regency at 400 SE Second Ave. — agreed to pay to replace three centrifugal chillers used to cool large buildings and a cooling tower at the convention center within the 5.7-acre, city-owned James L. Knight Center complex, all now 26 years old, said Lori Billberry, city public facilities director. The Knight Center complex's south side asset — adjacent to the hotel — is comprised of a performing venue with 4,646 seats, 23,000 square feet of conference space with event-style auditoriums and 26 meeting rooms and a 28,000-square-foot convention center. Global Spectrum manages the city-owned property. If by June the city and hotel don't reach agreement for Hyatt's expansion, the city would have to reimburse the hotel for 50% of repair costs. Design work is to cost $200,000 and the replacement of all three chillers another $2.5 million. Hyatt Equities has confirmed it's in talks with the city to expand, but no written agreement is in place, said Megan Schmollinger, development analyst for Hyatt. She said an agreement is still "far down the road" as the hotel has until June 30 to decide whether to take over the city's south side asset. Miami has long contemplated selling off portions of its interests in the money-losing Knight Center complex. To move toward this goal, the city commission in July approved cancelling the University of Miami's money-losing lease over the conference space. This year, the city subsidized the entire complex's operations by about $2.5 million, a sum that could rise next year, Ms. Billberry said. The prior year, the city lost $1.9 million on the complex, officials said. The Hyatt first expressed interest in expanding its conference area in 2007, when the hotel began undergoing major renovation and remodeling. If the hotel and the city reach an expansion agreement by next year, Hyatt would redevelop the to-be-acquired square footage into additional conference space for itself, said Ms. Schmollinger of Hyatt Equities. That could aid the hotel, because larger facilities could help book more group events, said Guy Trusty, a hospitality consultant. If the hotel were to acquire the adjacent facilities, the biggest investment would be in converting the performing venue into conference space. But if the hotel is willing to pay the costs, the 50,000-plus-square-foot expansion could boost business for the Hyatt because it could accommodate more small and mid-size groups for conferences and conventions, said Mr. Trusty, who is president of Miami-based Lodging & Hospitality Realty Inc. And the more groups a hotel brings for big-scale events, the more rooms it can book. He said with many groups targeting locations like Miami for their next conference, "there is a greater demand than supply." Next month, the city also prepares to put up for bid the Knight Center complex's north asset at 100 SE Second St.: a 10-story parking garage, the land beneath the Bank of America office tower and its ground-floor retail. In 2006, a city study determined it should sell the 1.3-acre north side asset. In preparation for the site's future sale, the city commission approved July 24 an amendment to the agreement with Off-Street Parking, the garage's management company. With Ms. Billberry retiring this month, a new director will be in charge of carrying out negotiations for the north and south assets. But she hopes her departure won't cause delays. She said she expects plans to stay on track, with a request for bid on the north asset to be presented to the commission in November. |
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