1675-4 Royal Palm Groove In spite of the new developments, Calin said he ' s proceeding with
caution.
"Our experience with Sheraton left us all jaundiced, so until we have
letters of intent and agreements, none of us will be excited. "
TAG: 9501260819
25 of 34 , 7 Terms T0403
mh95 SHERATON
03/07/1995
THE MIAMI HERALD
Copyright (c) 1995, The Miami Herald
DATE: Tuesday, March 7 , 1995 EDITION: FINAL
SECTION: FRONT PAGE: lA LENGTH: 78 lines
SOURCE/CREDIT LINE: TONY PUGH Herald Staff Writer
SHERATON
BACKS OUT
OF BEACH
HOTEL PLAN
A SETBACK FOR
BLACK PARTNERS
ITT Sheraton has withdrawn an offer to operate a black- owned hotel that
would be built in Miami Beach, leaving the project ' s struggling developers,
the HCF Group, with no major chain to anchor the site after nearly a year of
negotiations.
A partnership of four area black businessmen, HCF won the rights to
build a 265-room Sheraton Suites Hotel in the 1500 block of Collins Avenue
last summer. The $37 million project, specially designated for
African-American ownership, was the major objective in a 20-point accord that
resolved the black tourism boycott in 1993 .
But after months of delays, HCF President Peter Calin said a Sheraton
official phoned him recently to say the deal was dead.
"Basically, it was a money thing, " said David Proch-Wilson, director of
development for Sheraton' s North America division. "In analyzing this deal, it
was determined the money could be better used for (projects in) other
locations where the chain has no hotels. "
Sheraton operates hotels in Bal Harbour and in Miami. Calin remained
optimistic about the project despite the setback.
"It ' s not a major blow, " he said. "It ' s an opportunity to restructure the
deal in a better way for the investors we want to bring in. "
After Sheraton' s corporate board postponed a February vote on the
proposal, Calin began discussions with other hotels, according to a March 3
letter to Miami Beach City Manager Roger Carlton. The letter says Marriott and
Hyatt have "expressed strong interest" in operating the hotel.
In addition to Calin, HCF is made up of Argus Construction Co. owner
Eugene Ford, Texaco tax attorney Jerry Bailey and investor Marvin Holloway.
The group is still seeking additional partners after spiraling construction
costs pushed their initial project investment from $1 million to $4 million.
The hotel would be located directly south of the 830-room Loews Hotel planned
for 16th Street and Collins Avenue. The city has already purchased one $5 .5
million tract of land for the hotel. It had planned to put an additional $4 .5
million toward another parcel if Sheraton had sealed the deal. The money would
have been recouped over the life of the project.
If HCF is to hold onto the development rights, city officials say they
These are questions Peter Calin has heard for months. A vice president
with American Express, Calin is one of four black businessmen who formed HCF
Group Inc. , the partnership with rights to develop the 265-room Sheraton
Suites Hotel .
But because of spiraling construction costs -- which have pushed the
hotel ' s price from $37 million to $44 million -- and the project ' s slow
progress, speculation is high that HCF won't pull it off.
Calin says, "Not so. "
"I 've heard from the beginning that we wouldn't be able to do this. The
person in the street should understand the whole process takes time to work
out the details, " Calin said. "It ' s not unusual for a complicated project like
this to take this amount of time. "
0 But as negotiations intensify in the next few months, HCF will have its
work cut out to hold up its end of the deal. The group planned to invest only
$1 million in the project, but increasing costs have nudged that figure up to
$4 million. The group is looking for additional investors to pick up the slack
-- and they need not be black.
"We believe there ' s great interest in the African-American community, and
we ' re looking to tap those investors. But the most important thing to us is
that the hotel open its doors, so we won't turn away money from
non-African-American sources, " Calin explained.
In addition to Calin, HCF is made up of Argus Construction Co. owner
Eugene Ford, Texaco tax attorney Jerry Bailey, and investor Marvin Holloway.
The hotel would be at 15th Street and Collins Avenue, directly south of the
830-room Loews Hotel planned for 16th Street and Collins.
Arthur Courshon, chairman of Jefferson Bank and a member of. Miami Beach' s
hotel negotiating committee, is hopeful that HCF can find the cash. If it
can' t, the city would have to look for a new ownership group.
"I don' t think that ' s going to happen, " Courshon said. "From what I see
so far, they' re getting there. They're not there yet, but I don't have the
feeling that they won' t get there. . . . Reports of their death are greatly
exaggerated. "
Calin, in fact, is optimistic about recent developments. An agreement
with Sheraton to provide $8 million in exchange for managing and operating the
hotel awaits only corporate board approval in February, he said. The agreement
was slowed when Sheraton thought a $10 million contribution from the city of
Miami Beach was a grant rather than an "inducement" that must be repaid.
That $10 million will go toward purchasing the $11 million site. HCF must
come up with the other $1 million.
The group must then secure bank financing of about $22 million to
complete the deal. Barton S. Goldberg, president of Jefferson Bank, is working
to form a consortium of 12 to 20 banks that would provide up to $100 million
for the Loews and Sheraton hotels.
Hotel development projects have been unpopular with area lenders for more
than a decade, but Goldberg said these projects have bankers very interested.
"The reason they' re interested is because it ' s a CRA- qualified project,
and it will help create a lot of jobs, " Goldberg said. The Community
Reinvestment Act requires banks to invest in all areas they serve, including
poor areas. Noncompliance can halt branch expansion and other endeavors.
Since the hotel development area is designated as "blighted, " banks would
get valuable CRA points for lending there. For that reason, "we 've probably
got more people that want to get in (the consortium) than we need, " Courshon
said.
A task force is meeting to determine how the consortium will operate, but
Goldberg said the deal needs to be completed before the numbers can be
crunched. "They can't underwrite the loans until they know exactly what the
deal is going to be, " Goldberg said.
Because the project was pivotal in resolving the black tourism boycott,
it has attracted attention nationally. Last month, Black Enterprise magazine
highlighted the project with a full-page article in its Newspoints section.
i
And The Black Convention magazine is also planning an article.
Syndicated talk show host Tony Brown advocates blacks setting up an
"economic shield" or niche market by owning hotels in the nation' s 20 largest
cities. If the Miami Beach hotel materializes, Brown said it could have a
historic impact.
"Miami Beach would become to black America what Montgomery, Ala. , became
when Rosa Parks started the civil rights movement. . . . It would mean the
beginning of economic empowerment of the black community. "
Courshon said he wants to complete the deals on both the Sheraton and
Loews hotels by June. Calin wouldn' t say which, if any, new investors HCF is
courting. Only that the group is shaking the trees.
"I 'm certain the bumps in the road aren't over, " he said. "This is a very
complex public-private deal. But we 're confident we' ll get to the ultimate
goal of developing this hotel. "
CUTLINE:
NURI VALLBONA / Herald Staff
HOTEL INVESTORS: Eugene Ford Jr. , Jerry D. Bailey and Peter J. Calin are
seeking more investors for their planned hotel.
KEYWORDS: DEVELOPMENT CONSTRUCTION HOTEL
TAG: 9501070034
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