Court to rule on state-owned hotel

Mobile —- A legal dispute over plans for a four-star hotel on state beachfront property awaits an Alabama Supreme Court decision while tourism officials say it already has cost millions in lost business on the coast.

The justices are weighing whether to allow the Alabama Department of Conservation and Natural Resources to proceed with a lease of its beach property to Auburn University, or to strike down the deal over complaints about state leases, competitive bidding and high-priced rooms.

The high court has given no indication when it will settle the 4-year-old dispute. But tourism officials in Gulf Shores and Orange Beach hope for no more delays, saying convention business has drifted to Florida and Mobile since Hurricane Ivan finished off the old 144-room lodge at Gulf State Park in 2004.

Gulf Coast Convention and Visitors Bureau President and CEO Herb Malone estimates the area lost 32,500 room nights in 2007 and 2008 because of a lack of convention space. Malone did not have an estimate on the cost of the loss because of varying room rates.

After the old lodge was wrecked beyond repair, Gov. Bob Riley’s administration came up with a plan to build an upscale park hotel in a partnership between Auburn University and Atlanta-based West Paces Hotel Group.

Auburn would lease the hotel, and West Paces would run it, with Auburn hospitality industry students also working at the site. No state funds or parks bonds will be spent on the hotel project, state officials said in court filings.

Besides beachfront tourism revenue, state officials anticipated the hotel, if built, would generate $1 million in annual lease payments for the state parks system.

But Gulf Beach Hotel Inc., which operates the 300-room Perdido Beach Resort down the road from the state’s hotel site, filed a lawsuit saying the deal would violate state bid law and drive its owners out of business.

Ex-Conservation Commissioner Charles Grimsley and unions for teachers and state employees also joined the suit, saying only state employees can work at a state park complex, not privately hired workers or Auburn students.

“This project would take the people’s most treasured public asset away from them and turn it into a private playground for only the wealthy,” Grimsley said in an affidavit in the suit.

Montgomery Circuit Judge Gene Reese ruled last summer in favor of opponents, declaring invalid the state’s plan to lease the hotel site to Auburn University. He also ruled that state conservation department employees must run the hotel.

Last fall, state officials appealed Reese’s order to the state Supreme Court.