Hotel tax break fought Lawsuit challenges exemption for Inner Harbor East; Smaller project is goal; 'Groundbreaking doesn't mean that this is a done deal'; Lodging


Three members of a neighborhood coalition have filed a lawsuit challenging the legality of the tax exemption for the proposed Wyndham Inner Harbor East Hotel.

The lawsuit, filed in Baltimore Circuit Court yesterday by members of the Waterfront Coalition, is an effort to reduce the size of the project. The suit names as defendants the mayor and the City Council, along with three partnerships connected with the Inner Harbor East Hotel. It seeks an injunction, alleging that such action is necessary to prevent the loss of public funds from tax exemptions.

"Our goal would be to see a smaller hotel at the Inner Harbor East site and a larger one closer to the Convention Center," said Carolyn Boitnott, who filed the lawsuit with Nelson and Lily Adlin, all members of the Waterfront Coalition. "Just because there's been a groundbreaking doesn't mean that this is a done deal."

The lawsuit challenges the city's use of a provision authorizing an exemption from a bond vote for city-owned property. "It is nothing more than paper ownership to qualify for tax exemption, and we think it is not authorized by law," said a statement issued by the coalition.

Baltimore City Solicitor Otho M. Thompson said he had not seen the lawsuit late yesterday and declined to comment on its contents. John Paterakis Sr., president of H&S; Bakery, who has led a team of developers to build the hotel, could not be reached for comment. Wyndham officials said they had not seen the legal papers and declined to comment.

About 15 members of the Waterfront Coalition and others protested at the groundbreaking last week that signified the beginning of the 750-room Wyndham, to be the first new hotel in Baltimore in a decade. The $134 million project, touted as one that will boost the city's international exposure, attract bigger conventions and extend harbor attractions eastward to Fells Point, has been in progress for 2 1/2 years.

On June 16, the Board of Estimates approved the tax exemptions that will allow the Wyndham to pay $1 a year for 25 years -- amounting to about $85,580,000 in lost property taxes over 25 years, according to the coalition.

The city will get 10 percent of any return the hotel generates once the investors have received 15 percent. A similar arrangement with the Hyatt on Light Street generates about $2 million a year.

Yesterday's legal action marks the fourth challenge to the hotel. The first asked that the zoning approval be declared invalid and is set for hearing on July 13 at the Court of Special Appeals in Annapolis.

The second, which seeks to set aside the amendment of the Inner Harbor East Master Plan, is under consideration in Baltimore Circuit Court.

The coalition -- made up of neighborhood groups from Fells Point, Butchers Hill, Canton and East Baltimore -- also has asked the Maryland Department of the Environment to require an archaeological investigation of the buried train tracks thought to be under the hotel site.

Citizens can slow and alter projects with similar legal action, according to Melissa Mills, a consultant with PKF Consulting, a Los Angeles firm that serves the hotel industry.

Although Mills said she is not familiar with details of the Baltimore Wyndham project, she cited examples of projects that have faced legal challenges elsewhere, including a San Diego convention center expansion that was blocked for years by a citizen concerned about public expenditures.

Environmentalists unhappy about construction of a 2,500-unit housing development on a bluff overlooking wetlands in Huntington Beach, Calif., succeeded in reducing the size of the project, she said.

"I don't know if any of these people triumphed in the long run, but they certainly can slow things down," she said.

Pub Date: 6/24/98

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