Judges with the N.C. Court of Appeals have upheld a 2014 judicial decision that allows 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 by Virginia-based developer Harmony Hospitality Inc. 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. On Tuesday, a three-judge panel affirmed the lower court’s ruling.
“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,” Wilmington Mayor Bill Saffo said. “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.”
According to Wilmington City Spokeswoman Malissa Talbert, city officials have reached out to Harmony to discuss next steps.
Wells and Sotherly Hotels, owner of the nearby Hilton Wilmington Riverside, alleged 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.
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 Harmony Hospitality 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.
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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