1675-25 New Hotels •
10 of 13, 2 Terms
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ITT Sheraton has withdrawn an offer to operate a black- owned hotel that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
must show immediate progress toward securing a new chain.
Arthur Courshon, chairman of Jefferson Bank and a member of Miami Beach's
hotel negotiating committee, will spell out two possible courses of action at
a March 15 City Commission meeting: give HCF more time to find another hotel
chain or revoke their development rights and open the project up for new bids.
"They're going to have a tough decision to make and I'm not going to make
it easy," Courshon said of the City Commission. "They may say we've invested
enough time with HCF and it may be time for a stronger group to come forward."
But Bailey said HCF's experience and knowledge of the process makes the
group a natural choice to continue with the project.
"We have a tremendous head start at this stage; if you turn to a new
alternative, you're starting from ground zero," he said.
Miami Beach Mayor Seymour Gelber agreed.
"Once you put out (for new bids) , it becomes a whole new ballgame and you
don't know what contingencies you face," Gelber said. "We'll make every effort
to proceed as we began."
Courshon suggested giving HCF 30 to 40 days to find a new hotel operator,
but Bailey said that's not enough time. "Given the fact we're working with
large corporations and huge sums of money, that's a pretty narrow window to
conclude a transaction of this type," he said.
Calin feels up to 90 days may be necessary to sign a new chain, but
Courshon said he would not recommend that much time.
If an extension is agreed on, Carlton said it will likely require that
HCF make identifiable progress over time toward securing a new hotel chain.
"It has to be an aggressive schedule, but one that's achievable, " Carlton
said.
Courshon, Carlton and Gelber all reiterated the city's commitment to
making Miami Beach the home of the nation's first convention-size hotel owned
by African Americans.
"Our commitment is still as firm as ever and we intend to produce that."