Court of Appeals to hear arguments in convention center hotel lawsuit appeal

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The Wilmington Convention Center is off Nutt Street downtown. File photo.
The Wilmington Convention Center is off Nutt Street downtown. File photo.

Judges with the N.C. Court of Appeals will hear arguments on Wednesday in an appeal of a 2014 judicial decision that allowed the City of Wilmington to move forward with a land sale for a hotel next to the Wilmington Convention Center.

N.C. Superior Court Judge Paul L. Jones in June 2014 signed a ruling that determined the city wasn’t wrongfully subsidizing or underwriting the development of an Embassy Suites next to the Wilmington Convention Center, as alleged by resident Glenn Wells in a case he brought against the city in February 2014.

Wells appealed that decision in December 2014, and it will be argued at 1 p.m. Wednesday before N.C. Court of Appeals judges Sanford Steelman, Linda Stephens and Douglas McCullough, according to the Administrative Office of the Courts.

Wells and Sotherly Hotels, owner of the nearby Hilton Wilmington Riverside, allege the city sold land for the hotel’s development at a cost Wells and Sotherly said was well below fair market value. Selling the land at such a low cost–$578,820 for a riverside tract next to the city-built convention center downtown–amounted to a subsidy forbidden by a consent judgment from years earlier, they said.

City’s convention center hotel plan challenged

But Jones ruled that the consent judgment in question didn’t restrict the sale of the land itself. He also noted that the sale agreement between the city and Virginia-based hotel developer Harmony Hospitality Inc. didn’t promise the latter any public funds to build the Embassy Suites. That would be an all-private project. The order served to regulate the city’s involvement in the private hotel component.

Under a state law dealing with local government assistance in economic development, Jones added, “Wilmington is required to set the fair market value of real property to be conveyed. Wilmington thus had the authority to set that value at $578,820.”

The city finalized the sale of the site beside the convention center on Nutt Street to Harmony to build a $33.6 million Embassy Suites Hotel in December 2014. The hotel will include a full-service restaurant, bar, pool and meeting space.

The city’s agreement with Harmony sets the purchase price of the site—a 33,000-square-foot unimproved lot—at $578,820.

“We’re already halfway there since the convention center opened and now we look forward to working with Harmony to get this top quality hotel built so we can realize the full economic impact that will benefit our entire region,” Wilmington Mayor Bill Saffo previously said about the project.

The city expects $6.4 million in property and sales tax revenues over the next 10 years. It also says nearly 350 jobs will be involved in the construction, to begin late this summer. When the hotel is completed in early 2016, it will employ 207, a news release said.

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