Oct. 8, 2003 - The University of South Carolina has agreed to limit occupancy initially at its proposed hotel in exchange for a cease-fire in the school's battle with local hotel owners. 

The deal was announced on Tuesday at a news conference hosted by Gov. Mark Sanford, whose office mediated the negotiations. 

Both camps described the deal, reached late Monday, as a true compromise, with each side bending to accommodate the other. The agreement includes: 

-- A pledge to limit occupancy rates at the new hotel for four years. In the first year of hotel operations, occupancy cannot exceed 65 percent, which is close to the average for most downtown Columbia hotels. Occupancy can be as high as 85 percent in the fourth year. 

If occupancy rates exceed the set levels, USC must donate the extra revenue to the S.C. Hospitality and Tourism Educational Foundation. 

-- A promise by USC not to develop another hotel for at least seven years. The university also can't expand the Inn at USC unless the entire facility is occupied by federal prosecutors training at the adjacent National Advocacy Center. 

-- The hotel must be essentially "non-commercial"-- it won't be advertised in publications or be listed on hotel reservation Web sites. A hotel flag also won't be displayed in front of the building. 

-- All pending legal action and media campaigns designed to block the hotel project must be stopped. 

The deal does not stop a federal General Accounting Office inquiry into whether the National Advocacy Center violated federal procurement law by agreeing to lodge prosecutors at the inn. 

The proposed 117-room hotel on Pendleton Street has been caught in a maelstrom for more than a year, with hotel owners claiming the inn would unfairly compete against them. 

Some hotel owners had threatened to sue the university, arguing it violated state procurement law in awarding the hotel development deal. 

Tom Sponseller, president of the S.C. Hospitality Association and chief negotiator for hoteliers, said the deal reached Monday sets up acceptable protections for businesses. 

"We hope that the economy improves over the phase-in time so the impact on local hotels will be minimized," he said. 

USC president Andrew Sorensen, who removed himself from hotel negotiations last August after failing to broker a deal, hailed the agreement as a big step forward for the university's planned research campus, which will rely heavily on public/private partnerships. 

The proposed inn is a partnership with IMIC Hotels. But USC did not go through a formal bid process before choosing IMIC. 

Sorensen, who earlier upset local hotel owners by describing some of their properties as inferior, assured that future university projects will be handled more openly. 

"I wasn't here when these (hotel) negotiations began, so I didn't structure the original proposal or the nature of the negotiations," Sorensen said. 

The big winner Tuesday may have been Sanford, who was credited by USC officials and hotel groups alike for breaking the stalemate. 

"We couldn't get any local politicians to help us, but Sanford did," Sponseller said. "The urgency with this was caused by the fact that the governor opened up his door, essentially forcing people to sit down and negotiate." 

Sanford and chief of staff Fred Carter had hosted several talks between USC and hoteliers. Those appeared stalled until Monday morning, when USC asked for another meeting. 

Carter, Sponseller and USC chief financial officer Rick Kelly spent hours hashing out last-minute details before the deal came to fruition. 

"Once we reached the point where the major issues were resolved, it came to a conclusion pretty quickly," Carter said. 

At the news conference, Sanford said the hotel dispute should serve as a cautionary tale for future public/private partnerships that cut into existing businesses. 

He also said the hotel dispute might have been avoided if the state's 33 public colleges were less autonomous and more centrally controlled. 

"I think some of these issues ... resurfaced for me the need for a coordinating system in looking at higher ed," Sanford said. 

The Columbia City Council is expected to approve final zoning for the hotel project today. 

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(c) 2003, The State, Columbia, S.C. Distributed by Knight Ridder/Tribune Business News.