City: Legal path cleared for convention center hotel construction

PortCityDaily.com is your source for free news and information in the Wilmington area.

A rendering
A rendering of a proposed Embassy Suites hotel planned near the Wilmington Convention Center downtown. Rendering courtesy City of Wilmington.

The final potential legal hurdle for the Wilmington Convention Center hotel was cleared on Tuesday, when the deadline to appeal a court of appeals decision passed with no appeal.

Judges with the N.C. Court of Appeals 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 last month. Construction can now begin in the project, according to City of Wilmington Spokeswoman Malissa Talbert.

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. In June, a three-judge panel affirmed the lower court’s ruling.

“This is a great day for the City of Wilmington,” Mayor Bill Saffo said. “The city’s position has been validated at all levels of the North Carolina courts and we are now looking forward to working with the hotel developer to begin construction on the hotel as quickly as possible so that we can begin to realize the economic benefits of this important project.”

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.

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 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.

Read related coverage: