City Of Miami Hunts For Cash In Deal With Hyatt Which Wants To Buy Site
Written by Yudislaidy Fernandez on December 23, 2010
By Yudislaidy Fernandez
The City of Miami committed to split with the Hyatt Regency the cost of cooling system repairs needed at the city-owned downtown property and even paid for a study to confirm the repairs were needed, but now it has to find the money to pay its share.
The hotel has also voiced interest in buying the conference facilities, but the two haven’t been able to agree on a price.
The city would only sell the property, on which it still has $30 million left to pay from a bond obligation, if it can "get fair market value" for it and cover the remaining bond debt, said Madeline Valdes, director of the city’s Department of Public Facilities.
"We had some preliminary conversations with Hyatt about purchasing [the property], but Hyatt did not provide the city with numbers adequate for the property," she said.
The Knight Center complex adjacent to the hotel at 400 SE Second Ave. comprises a performing venue with 4,646 seats, the 23,000 square feet of conference space previously run by the University of Miami and a 28,000-square-foot convention center.
After 26 years of the university leasing and running the conference facilities with event-style auditoriums and meeting rooms, the city took them back in December and rebranded them as Miami Conference Center.
Global Spectrum, which already managed the performing venue and convention center at the complex for the city, got the contract to manage the conference space.
Because Miami and Hyatt haven’t reached an agreement to allow the hotel to lease or buy the conference center, the cash-strapped city is on the hook for its $2 million share of repairing the aging cooling system.
But if the two agree for the hotel to take over the space, then the Hyatt would waive the city’s portion.
The city paid engineering design consultancy PBSJ $14,000 to review the design and engineer plans that Hyatt had consulting firm Grumman/Butkus Associates put together to replace the three chillers at the property.
PBSJ’s report concluded that it agreed with the scope of work specified in Grumman/Butkus’ report, Ms. Valdes said.
Megan Schmollinger of Hyatt Equities said the hotel is still interested in buying the conference facilities and make upgrades needed to draw conventions and events of higher caliber.
"The space needs a lot of work. It needs an update," she said. "We are open [to discussions] whenever the city wants to prioritize the project."
Since 2007, Hyatt Equities — Chicago-based management office for the 612-key Hyatt Regency — has voiced interest in taking over the adjacent venues to attract more groups to book events at those facilities and stay at the Hyatt.
Miami Mayor Tomás Regalado told Miami Today the city is willing to continue talks with the hotel because it understands the need for quality convention space in Miami.
"What they want to do is to enhance the convention facilities, and we do need in the core of downtown Miami convention facilities," Mr. Regalado said. "They understand too they have to compete with the [JW] Marriott, the Four Seasons and the InterContinental hotel."
In late October, the city commission approved extending Global Spectrum’s management contract of the conference center to one year with two one-year renewal options.
Despite possible negotiations between the hotel and the city, Global’s management agreement was extended, Mr. Regalado said, "because whatever happens is not going to happen tomorrow."
It’s in the city’s best interest to reach a deal with the Hyatt, he said.
"They have to be successful, and if they have to be successful by expanding their facility," he added, "we have to facilitate that because we don’t want a failing Hyatt."
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