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Pennsylvania's Highest Court Ends the Legal Fight Started by a Group of Erie Hoteliers
Who Challenged the $100 million Bayfront Convention Center and Hotel Project
By Kevin Flowers, Erie Times-News, Pa.McClatchy-Tribune Regional News

Jun. 11, 2008 - Pennsylvania's highest court has ended the legal fight started by a group of Erie-area hoteliers who challenged the $100 million Bayfront Convention Center and hotel project.

The Pennsylvania Supreme Court is refusing to hear an appeal from the hoteliers, according to an order issued by the court on Thursday.

"The petition for Allowance of Appeal is denied," the court's one-sentence order states, without elaborating.

The Supreme Court's decision means the hoteliers are out of appeals. The case was also appealed to the state's Commonwealth Court, which rejected the hoteliers' arguments in August.

"It's the last avenue of appeal we had," said Michael Agresti, the Erie lawyer who represented the hoteliers. "That will end it... we're disappointed in the court's decision."

Hotelier Nick Scott Sr. could not be reached for comment Tuesday.

In prior interviews, Scott had been vocal about the lawsuit's key issue -- Erie County's 5 percent hotel room tax and the Erie County Convention Center Authority's plan to use revenue from that tax to help fund operations at the eight-story, 200-room Sheraton Erie Bayfront Hotel on west Dobbins Landing.

The Sheraton opened to the public in April, and is host hotel for the Bayfront Convention Center, which opened in August on the Sassafras Street Pier.

Hoteliers argued that the hotel room tax is unconstitutional because it helps fund a public hotel that will unfairly compete with existing hotels and cost them millions of dollars in lost business.

The Erie County Convention Center Authority, which owns the convention center and hotel, argued in court that proceeds from the room tax will not be used to pay for the hotel.

The authority's share of the tax covers operating shortfalls at the Convention Center, Jerry Uht Park, the Warner Theatre and Tullio Arena.

The authority argued that the project will increase tourism and benefit existing hotels.

Erie County Judge John A. Bozza dismissed the hoteliers' initial legal challenge in March 2006.

Casey Wells, the Convention Center Authority's executive director, declined comment because Scott's breach-of-contract lawsuit against the authority is still pending in Erie County Court.

Wells referred questions to W. Patrick Delaney, the Convention Center Authority's lawyer in the hoteliers' suit. Delaney could not be reached for comment.

That breach of contract case is separate from the hoteliers' lawsuit.

The convention center project's original plans called for the facility and its host hotel to be built on Scott's property on lower State Street, with Scott's company building the hotel.

But Scott and the authority parted ways in September 2003, in part because of Scott's concern about financing contingencies for the hotel. The authority then had to find another site and another hotel developer.

The lawsuit has already cost the Convention Center Authority about $900,000 in legal and related fees. The hoteliers' lawsuit costs were not available.

Roger Richards, an authority board member who headed the group's development team on the convention center and hotel project, has said most of those legal fees have been covered by insurance.

Commonwealth Court judges upheld Bozza's decision in August via a 2-1 ruling.

At that time, President Judge Bonnie Brigance Leadbetter and Judge Jim Flaherty affirmed Bozza's decision. The affirming opinion, which Leadbetter wrote, stated that earlier court testimony in the case "supports the finding that the host hotel alone will induce additional demand beyond that induced by only a convention meeting facility."

The opinion also stated that the hoteliers did not demonstrate that the Sheraton would enjoy any special competitive advantage over other local hotels.

But the third Commonwealth Court judge, Doris A. Smith-Ribner, wrote a sharply worded dissenting opinion which stated that local hotel owners "have demonstrated a substantial burden from the tax, palpably disproportionate to any proposed benefit."

Agresti, the plaintiffs' lawyer, said the hoteliers are upset that the Sheraton is able to offer "luxury rooms at discount rates," because the hotel tax gives it some operating loss insulation that private hoteliers do not enjoy.

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Copyright (c) 2008, Erie Times-News, Pa.

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