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Real Estate - Commercial

Convention Center Hotel Dispute: Appeals Court Rules In City's Favor

By Cece Nunn, posted Jun 16, 2015
Update: this version of the story contains Harmony Hospitality's response to the court's ruling.

The state Court of Appeals unanimously ruled in the city of Wilmington's favor in a legal dispute involving the planned convention center hotel, city officials announced Tuesday.

At issue was a 2006 legal agreement that outlined how the privately owned hotel could be built. Last year, the Wilmington City Council approved an agreement with Harmony Hospitality Inc., to buy land and construct a 186-room, full-service Embassy Suites Hotel next to the Wilmington Convention Center. Sotherly Hotels, owner of Hilton Wilmington Riverside, had challenged the city's agreement to sell the land to Harmony. The sale was upheld in Superior Court, but then appealed to the N.C. Court of Appeals.

“We’re ecstatic about the court’s strong opinion concerning the strength and validity of the city’s legal position on this issue and we’re ready to move forward," said mayor Bill Saffo of the Tuesday ruling. "We will work with Harmony to move as quickly as possible to begin construction on the hotel so that we can begin to realize the economic benefits of this important project.”

Much of the city’s legal argument hinged upon the economic growth the hotel is expected to bring, including an estimated $6.4 million in property and sales tax revenues over the next 10 years; 346 hotel construction jobs; and 207 jobs when the hotel is completed.

In February last year, a lawyer for Sotherly said in a letter that the city was violating the 2006 decree with its proposed “below market purchase price” offered to Harmony.
 
The court filed the ruling Tuesday stating that primary arguments of the appeal were “wholly unpersuasive," according to the city's announcement.  

"In what the city’s legal advisors call a very strongly worded opinion, the court went on to state several times in the 22-page ruling that the city does not violate the original 2006 legal agreement because 'Wilmington is not subsidizing or underwriting the hotel,'" the release said.
 
The city also said Tuesday that while the plantiffs could, within 35 days, ask the N.C. Supreme Court to hear an appeal of the ruling, the city’s legal advisors pointed out that the court agrees to hear only about 5 percent of appeal petitions.  

In a statement released Tuesday afternoon, Harmony Hospitality's president, Page Johnson II, said that his company will "move swiftly" to develop the new Embassy Suites Hotel. "We have instructed the civil engineers to move as quickly as possible to obtain site approval," he said.
 

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