Erie tax OK'd
PITTSBURGH — Erie County can use a room tax to pay for a publicly funded hotel at a new convention center, despite opposition from other lodging owners, a state court ruled Wednesday.
The Commonwealth Court, in a 2-1 ruling, struck down an appeal filed by the owners of several local hotels who say they are being forced to subsidize the competition.
The county and the Erie County Convention Center Authority have argued that the center will help all hotel owners in the long run, even with its publicly funded hotel. In its decision, the court said the hotel owners opposed to the tax did not disprove that theory.
Eighty percent of the money collected by the 5 percent room tax goes toward the city's new Bayfront Convention Center, which opened this month, and a 205-room hotel that is still under construction. The rest of the tax goes into a fund used to boost tourism.
The opposing hoteliers argue the tax makes their room rates less competitive.
In a sharply worded dissent, Judge Doris A. Smith-Ribner, said the hotel owners "have demonstrated a substantial burden from the tax, palpably disproportionate to any proposed benefit."
An attorney for the private hotel owners criticized the ruling.
"You know what the decision means, don't you?" said attorney Kent Maynard Jr. "It's the government saying, 'Sit down and shut up. We know better than you do. This is good for you."'
The private hotel owners have 30 days to appeal.
Another attorney for the opponents, Michael Agresti, said there are grounds for an appeal.
"We appreciate the thoughtful dissent of Judge Smith-Ribner," he said.
Both the majority opinion and dissent relied largely on a 2002 Pennsylvania Supreme Court decision that upheld the legality of a hotel room tax to fund a convention center in Lancaster.
The Erie hotel owners said that case was different because that tax did not pay for a hotel that was part of the convention center development.
But the court ruled that what mattered is whether the hotel owners could prove they would not benefit enough from the convention center to justify the tax.
The majority opinion, written by Judge Bonnie Brigance Leadbetter and joined by Judge Jim Flaherty, relied on testimony by county-hired consultants who said a hotel would make the convention center more successful, thereby helping the other hotel owners in the long run.
