West Virginia Supreme Court hears arguments in Tourism Development Act challenge
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CHARLESTON - A 2020 law meant to pave the way for the redevelopment of the historic Hill Top House Hotel in Harpers Ferry was the focus of oral arguments Wednesday before the West Virginia Supreme Court of Appeals.
The lawsuit, brought in 2022 against the former Department of Economic Development (now the Division of Economic Development within the Department of Commerce) by five Harpers Ferry residents, directly challenges the Tourism Development District Act.
Passed in 2020 by the West Virginia Legislature, the Tourism Development District Act gives the state Development Office authority to involve itself in tourism projects that qualify for the tourism tax credits in historic districts and have a minimum private investment of $25 million in Class IV municipalities, which are cities with 2,000 or fewer residents.
Once designated, a tourism development district is exempted from municipal regulatory authority - including zoning, land use, historic preservation, building permits, noise, lighting and licensing ordinances - and placed under state-level regulatory oversight.
The bill was specifically aimed at the Hill Top House project in Harpers Ferry but could apply to as many as five projects that qualify for tax credits under the Tourism Development Act. A group of investors - SWaN Hill Top House Hotel LLC - has been wanting to renovate the dilapidated 129-room hotel, but the project has been held up for one reason or another for nearly 20 years due to issues with the Harpers Ferry government and local residents.
The property was acquired by SWaN in 2007. The Department of Economic Development approved SWaN’s application in 2021, designating the Hill Top project as an approved tourism development district. The SWaN private investment was estimated at the time at $138 million.
In January 2022, Harpers Ferry residents Alexander Fleming, Carole Carter, Carol Gallant, Barbara Humes and Benjamin Buckley filed separate complaints in Kanawha County Circuit Court, which were later consolidated into an amended complaint. The parties alleged that the Tourism Development Act constitutes unlawful special legislation and improperly strips citizens of their equal protection and voting rights.
"The effect of the Tourism Development Act ... was to displace virtually all municipal regulation as applied to districts," said Bob Bastress, an attorney for the Harpers Ferry residents. "It retained most of the taxing powers that municipalities possess, but its regulatory powers were completely displaced and transferred to the state."
The Kanawha County Circuit Court dismissed their case at the request of the state, citing a previous court case brought by a Harpers Ferry nonprofit in 2021 that made a similar claim that the Tourism Development Act was an unconstitutional special law. The Jefferson County Circuit Court dismissed that lawsuit. The state Intermediate Court of Appeals also upheld the Kanawha County dismissal, which also found there was no violation of constitutional equal protection rights or self-rule rights.
Chief Justice C. Haley Bunn questioned Bastress about whether his clients have standing to bring a case challenging a special law.
"Most litigation regarding special laws is brought by municipalities," Bunn said. "Can you address whether or not we need to have the municipality involved in this and whether your clients do in fact have standing here?"
"I don’t think they’re a necessary party," Bastress said. "I wouldn’t know why they would be. And certainly, Harpers Ferry has not expressed any interest in entering the suit, either as supporting the petitioners or the respondent. It has simply expressed no opinion."
Solicitor General Michael Williams, representing the state, said the Tourism Development Act is a valid law because it defines the class of cities that can participate, and leaves open the door for other municipalities to apply.
"The Legislature was concerned with what happens when a very large project encounters a very small town," Williams said. "So, it would find a class of towns to deal with that specific problem. Beyond their special law argument, petitioners merely asked this court to recognize constitutional rights that do not exist. There is no such right to be regulated by a town instead of the state."
Justice H.L. Kirkpatrick asked Williams whether any other smaller municipality has applied to be a tourism development district. While the Hill Top House is the only project to date, Williams said the Legislature recently extended the deadline for additional projects to apply.
"The law has been extended to 2030. So, the class is still open. There’s still a possibility," Williams said. "I think the reality is that if this were a special law that was really meant for sort of a one-ticket-to-ride, one-time-only-type program, this law probably would have been written quite differently."
The Hill Top House was built in the late 19th century by Black entrepreneur Thomas Lovett. During its history, the hotel played host to famous guests such as President Calvin Coolidge, telephone inventor Alexander Graham Bell, author Mark Twain and civil rights leader W.E.B. Du Bois.
The hotel site continues to deteriorate according to the Harpers Ferry Historic Landmarks Commission. The Journal reported in June that the commission wrote a letter to the state Department of Commerce raising concerns about the lack of progress by SWaN, which began demolishing Hill Top House in 2021.
Steven Allen Adams can be reached at sadams@newsandsentinel.com.