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Developers of a Planned Convention Center and a 300-room Hotel in Lancaster Pennsylvania
 Sued by Nearby Fairfield Inn and a Holiday Inn Claiming the Use of County's
 Room Tax for Project is Unconstitutional

Lancaster New Era, Pa.McClatchy-Tribune Business News

Jul. 13, 2006 - Developers of the convention center and hotel complex on Penn Square have been sued again.

The owners of two hotels have filed a lawsuit claiming the county's hotel-room tax is unconstitutional.

Horst Hotels Co., owner of Fairfield Inn by Marriott in Manheim Township, and Ephrata Motel Partners, owner of Holiday Inn in Denver, filed the suit Tuesday in Lancaster County Court.

Named as defendants are the Lancaster County Convention Center Authority, the city's Redevelopment Authority and Penn Square Partners.

They are developers of a planned 220,000-square-foot convention center and a 300-room hotel at the site of the former Watt & Shand department store.

Lancaster County also is named as a defendant.

The lawsuit asks that the 1999 county ordinance that established the tax be declared unconstitutional. The suit also seeks a permanent injunction preventing the county from enforcing the ordinance and asks that all tax money the two companies have paid over the years be returned.

Proceeds from the tax go to the convention center authority and the Pennsylvania Dutch Convention and Visitors Bureau.

The authority gets 80 percent of the proceeds -- about $3 million per year -- while the bureau gets the remaining 20 percent.

Horst Hotels and Ephrata Motel Partners said they believe the 3.9-percent tax is unconstitutional because it places a burden on them without benefit.

"Instead, the taxes benefit only the proprietary interests of the county of Lancaster and the city of Lancaster and the operator and future owner of the adjoining hotel," the suit states.

A group of 11 hotel owners filed a similar suit against the convention center authority in 2000, also alleging that the tax is unconstitutional.

Those owners, which did not include Horst Hotels or Ephrata Motel Partners, lost the suit.

The new suit maintains that one reason Judge Louis Farina ruled against the original suit was that the hotel would be privately financed and the convention center authority would not be involved in its operation.

"Now, however, the project is entirely publicly owned with common management," the new suit states.

Penn Square Partners, the private developer, is composed of general partner Penn Square General Corp., a High Industries affiliate, and limited partners Fulton Bank and Lancaster Newspapers, publisher of the Lancaster New Era, Intelligencer Journal and Sunday News.

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To see more of the Lancaster New Era, or to subscribe to the newspaper, go to http://www.lancasteronline.com/newera.

Copyright (c) 2006, Lancaster New Era, Pa.

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