In its Jan. 31 editorial “How to keep a happy home”, the difficulty in seeking an accommodation from a mortgage service organization is described and persons at risk of losing their houses through foreclosure are encouraged to contact Tabor Community Services. “Tabor helps distressed homeowners navigate the myriad of state and federal programs that are designed to help them avoid foreclosure.”

WATCHDOG: Good advice. However, a large portion of home mortgages have been “securitized”, that is they have been packaged as part of bonds and sold to passive investors, and thus are beyond the discretion of the loan originator. To make things worse, the very mortgages have often been divided up according to levels of risk and the parts bundled in separate offerings. (For a $100,000 mortgage, the amount between $90,000 and $100,000 is at greatest risk.)

In such cases, the service organizations are only empowered to collect the money, not to negotiate any variation in terms. Thus they seem unresponsive.

As part of efforts to stem foreclosures, one of the considerations is for the federal government to authorize service organizations to negotiate and approve modifications in terms and settlements. Bond holders and debtors both benefit from a “work out” or “cram down.”

The County Commissioners had 2 appraisals for the property on W. King, currently the Magistrate office. That is going up for closed bids in March at absolute of $460,000.

There is no way in today’s economic conditions someone is gong to pay that price or
more for a piece of property that is assessed at 185,000. The County paid tooooo much for it 30 years ago…

The County also want to know what the buyer is going to do with it. Mr. Lehman and I had words as I informed him that cannot be part of the decision if it is to go to the highest bidder.

If no one bids at $460,000 or higher, they will then come up with another plan. They said that by doing it this way, the public will be privy to the whole process, not like Conestoga View.

Mr. Lehman wants something done to put it on the tax roles. AFTER the meeting I asked them why that consideration was not on the table when the W & S building was up for sale. Upscale condos would have been wonderful instead of a complex with no taxes for 20 years. There was no comment.

In response to the January 25th editorial “Job opening ignored”, it is both shameful and predictable that the NewsLanc.com job has not been wholly inquired by Lancaster County reporter applicants.

You see (and applicants– don’t due to myopia) that NewsLanc.com takes on the strong entities of this county such as ‘The Big Five’ — The Lancaster Newspapers, Franklin & Marshall, Lancaster General Hospital, The Fulton Bank and The High Group. And at the same time, NewsLanc.com supports the alternative path of covering news much to the chagrin of these county companies and the principles that run these organizations.

Potential applicants are not seeking employment with NewsLanc.com opportunities out of fear of these entities, but also out of unsuredness and trepidation of their respective economic futures. Lancaster County is a small, gossip-ridden county. And for that purpose, any individual who affronts the Big Five and the self-serving thinking of the county powers will surely be ostracized and may I see ‘blackballed’ from future conventional news reporting job employment opportunities.

As an everyday reader of NewsLanc.com, I greatly appreciate the alternative news approach to Lancaster County as opposed to the calculated coverage offered by Lancaster Newspapers. But alas, I am not journalistically-trained and I read NewsLanc.com everyday, purely as a devotee, in anonymity.

To be a reporter for such an alternative news source demands individuals who not only seek to publish truthful articles that offer an alternative approach to the powers of the county, but also individuals who put their cogent approach to reporting above their own financial securities and the fortitude to publicly signing their names to NewsLanc.com articles.

Overall, I find it starkly refreshing that NewsLanc.com is having difficulty in employing any reporters. As I would much rather read an article by a reporter who is completely devoted to alternative news coverages of Lancaster County rather than a reporter who practices ’safe news’ and would rather report half-devoted news items that would be self-protective and further propagate the obsequious nature of organizations such as ‘The Big Five’.

To NewsLanc.com, please continue your news coverage that is pure and alternative compared to what is offered by Lancaster Newspapers. And if it possible, please wait for those reporter applicants that share your purity of soul and who aren’t afraid to print truthful, alternative news item that cover our everyday Lancaster County lives.

Is it common knowledge that Tom Beeman [President of Lancaster General Hospital] and John Fry [President of Franklin and Marshall College] are college buddies?

(Second in a series)

The “small local group of owners” mentioned in the Winterbottom report, negotiating to buy the historic Watt & Shand/Bon Ton building “at a fair price,” were headed by three of the twelve founding and executive committee members of the Lancaster Alliance – S. Dale High; Jack M. Buckwalter; and Rufus A. Fulton, Jr.

The powerful triumvirate – all three respectively the Presidents and CEOs of the county’s largest industrial business, High Industries; its monopoly publisher, Lancaster Newspapers, Inc.; and richest local bank, Fulton Financial Corp. – was about to form a new company, Penn Square Partners, a limited partnership with the High affiliate as general partner and subsidiaries of the Newspapers, Inc. and Bank as limited partners. . . and it would be the start of something really big.

The close relationship between LDR International Corp, the Lancaster Alliance and Lancaster Campaign is noted by Winterbottom on page two in the acknowledgments section of the study, called an “Economic Development Action Agenda,” and released in early February, 1998:

“Our particular thanks go to [Lancaster Alliance board member] Lou Varljen who chaired the Project Coordinating Committee, Tom Baldrige, Executive Director of The Lancaster Alliance, Mary Barnard, Director of The Lancaster Campaign, and Tina Schmucker, Administrative Assistant to the two organizations. Their day-to-day guidance and direction, and enthusiastic participation throughout the process, made this a labor of love.”

Winterbottom did not identify the High, Buckwalter, Fulton group by name as prospective buyers in his report. The details of the transference of ownership of the building had not been finalized at the time of the release of his study, but a de facto deal was clearly in place. The question of which “local group” would get the Watt & Shand building seemed a decision already made, or the ‘fix’ was in, depending on how one looked at it.

The sale of the Watt & Shand building was a complicated business arrangement from the outset. After the collapse of the HACC proposal, the Bon-Ton company leadership made it clear they wanted to divest of the site, now vacant for three years. Bon-Ton said they were going to put the structure up for sale at a national public auction, something newly-elected Mayor Charlie Smithgall said he strongly opposed.

Immediately after taking office in the first week of January 1998, a month prior to the public release of the Winterbottom report, Mayor Charlie Smithgall stated he wanted the city to buy the historic Watt & Shand building in order to re-sell it to a local developer, to keep it on the tax rolls, but out of the hands of out-of-town investors.

Smithgall promptly appointed James O. Pickard as “Economic Development Director.” Pickard’s top priority was finding a private buyer for the vacant Watt & Shand building. Pickard, a successful businessman, part of the local Republican political establishment and a former Pennsylvania state Commerce Secretary, would take no salary for his job.

On January 12, 1998, a week after Smithgall’s inauguration, Pickard announced the city of Lancaster was, itself, negotiating with Bon-Ton to buy the building. Here is how the prospective sale was reported in the Lancaster New Era (”Sale of Bon-Ton to city expected within a week”) on that date:

“In what could be a pivotal step in the revitalization of downtown Lancaster, city officials said today they expect to sign an agreement to buy the Bon-Ton department store on Penn Square this week.”

Pickard spoke about the process in selecting a private developer to whom to re-sell the building in the same article: “We want a completely open process,” he said, speaking on behalf of the mayor, adding: “This is the single most important thing we can do in the next four years.”

Smithgall indicated the city intended to hold the building for a short period until it could be re-sold to a private local concern. Assurances of impartiality from the Smithgall administration in selecting the developer appear to conflict with the new mayor’s close and established relationship to one set of prospective developers; the ones associated with the Lancaster Alliance, Penn Square Partners.

Winterbottom said as much when he pointed to Smithgall’s deep involvement in his study paid for by the Alliance:

“Finally, Lancaster’s new Mayor, Charlie Smithgall, was an active citizen participant in the process several months before his election as Mayor, and well before his inauguration in January. …”

Given the new mayor’s intensive pre- and post-election participation in the Winterbottom report, it is possible that the gregarious, deal-making, politically shrewd Smithgall may have been inclined to tilt the playing field, i.e. the Watt & Shand building sale, in favor of his friends – and political supporters – from the Lancaster Alliance. They were also a known quantity.

If so, was the city’s purchase an arrangement to conceal from Bon Ton the interest of perhaps the three wealthiest entities in the region in its property?

On February 17, 1998, Bon-Ton sold the downtown historic structure, known as the Watt & Shand building, directly to Penn Square Partners for $1.25 million.

In covering the sale to the Intelligencer Journal of January 18, 1998 reported,

“’We’re looking at all the options,’ said S. Dale High, president and CEO of High Industries Inc., parent company of the real estate group.

‘We see it as a mixed-use building.’

Downtown merchants and others have suggested a variety of museums, giant-screen and foreign film theaters, heritage-oriented shops, a visitor’s center and restaurants.

High said his organization intends to carry out a full market analysis to find the right combination of uses that will succeed in the building.

‘We’re not going to rush and do something shortsighted,’ he said. ‘We want something with long-term value for the community.’”

If one put together a ‘dream team’ of Lancaster County businesses to form a business alliance in Lancaster County, Penn Square Partners would be that team.

High Real Estate, a subsidiary of High Industries, was the designated “General Partner” of “Penn Square General Corp.” –  the legal name of the partnership. Lancaster Newspapers, Inc. and Fulton Financial Corp. were limited partners, with Fulton taking a smaller investment share.

At the time the new Penn Square Partnership was formed, in February, 1998, S. Dale High had been head of the High companies since 1977.

Sanford H. High, Dale’s father, founded the company, then called High Welding Co., in 1931 with Sanford’s brother, Benjamin. It became High Steel, and subsequently High Industries became the name of the parent company.

Dale, as he was known, was the youngest of Sanford’s three sons. Calvin was ten years Dale’s senior and Donald between them in age.

Dale was the only one of the three boys to graduate from college; (Calvin left after one year; there is no record of Donald attending any college). Dale graduated from Elizabethtown College in 1963, with a degree in business administration. Calvin worked alongside his father in the executive branch of the business, and was president of the steel company for a few years in the early 1970s. Donald took a quieter, more modest career path, and operated a crane for 50 years.

When Dale came to work for the family company in 1963, High Steel had 60 employees and gross revenues of about $1 million per year. By 1997, annual revenues were approaching half a billion dollars, the corporation had dramatically diversified its services, and personnel had grown to nearly 3,000. Dale was largely responsible for that growth.

From the inception of the company in 1931, until the time Dale, at age 35, took it over in 1977, High companies owned no hotels. From 1988 to 1998, with Dale leading the company, High’s new hotel division built or purchased eight hotels.  And a hotel seems to be what Dale had in mind for Penn Square from the start.

John H. “Jack” Buckwalter, like his father, Isaac Z. “Izzy” Buckwalter, was a lifer with the company, owned for more than a century by the Steinman family.

Jack was a city boy and, after graduating from McCaskey High School, stayed home and took a degree from Franklin & Marshall College, before earning an MBA at Harvard. He followed his father into the newspaper business and, according to a puff piece written about him in 1996 in the Intelligencer Journal, Buckwalter rode to and from work with dad for a period of seven years.

In December 1988, 52 year-old Jack M. Buckwalter was named President and CEO of Lancaster Newspapers, Inc. At the time of his big promotion, Buckwalter held the same position as his father before he retired, executive vice president. Now, Jack was in charge of the whole thing – the three broadsheets; the popular farming tabloid; the Spanish paper, everything.

Rufus A. Fulton, Jr. (no relation to the bank’s namesake founder) had spent his professional life, about 30 years, with Fulton Bank before ascending to President and CEO in 1993. Fulton, like Buckwalter, started at the lower rungs of the company ladder; in his case, as an entry level trust officer trainee, and climbed to the top of the bank’s management hierarchy.

Fulton, like Buckwalter, was an early supporter of the HACC plan before it was killed. Both Rufus and Jack were also close social friends, who often lunched together at the exclusive, members-only Hamilton Club.

By early 1998, it was clear that HACC was definitely not coming downtown. Charlie Smithgall and the majority Republican, anti-HACC city council assured that. Now, the three partners – led by High – had to figure out something to do with the building they just bought.

On February 19, 1998, two days after it was announced that Penn Square Partners had purchased the Watt & Shand Building, a public presentation of Lancaster Campaign’s vision for downtown was held at the Armstrong World Industries headquarters on Liberty Street in Lancaster. The auditorium was reportedly filled with “hundreds of people,” according to the Intelligencer Journal.

At that meeting, Bert Winterbottom spoke: “If the renovation to the Brunswick is significant,” he was quoted in the Intell article, “and if you can create that conference center, I predict that within five or six years you’ll have a second hotel.”

At this point, in early months 1998, they were still calling it a “conference center”, perhaps in part at that time because at that time there was state funding for conference centers, and still locating it at the Brunswick in Lancaster Square. Both of those things were about to change.

###

Chapter Three: Helping Hands in Harrisburg

Second in a semi-monthly series by Jim Sneddon

There were times, over several years of public meetings of the Lancaster Convention Center Authority, when various board members and the executive director claimed they were keenly aware of their fiduciary responsibility in handling tax dollars. In reality, after a careful and meticulous check of years of records, there was little justification required of consultants who were paid millions of dollars for work allegedly done for the Authority.

When questioned, however, it didn’t stop the Authority from creating a picture for the public that it was being “prudent” in how it was spending millions of dollars in taxes for consultants and attorneys.

Chairman Ted Darcus told the audience at the Oct. 13, 2005 board meeting “our goal is to be prudent towards the taxpayers’ dollars.” He echoed comments from former Chairman James Pickard who “acknowledged the grave responsibility the Authority has in managing public dollars…”

Executive Director David Hixson regularly functioned as cheerleader for the board and the project. Often he responded to questions about bills and lack of details by talking about “negative discourse” rather than providing substantive answers.

Willie Borden stated that as treasurer he reviewed the monthly billings for accuracy.

Board member Joe Morales told the public “I trust the people we’ve hired to run this project and I take a lot of stock in the … experts that do this for a living.”

Even auditor Donald Diehm stated that he looked at a sampling of the detail of invoices and found that all invoices had sufficient detail. Since the audit was for the 2004 – 2005 fiscal year it would have included $122,000 in miscellaneous expenses for Dan Logan that provided no detail. It also included invoices from another consultant, Fairmount Capital Advisors that were woefully short on detail.

With offices in Center City Philadelphia, Fairmount Capital Advisers signed its original contract with the Authority in June 2003 while Pickard was still Chairman.

As with some other consultants, the firm had a link to the Pennsylvania Convention Center Authority and the City of Philadelphia’s Convention Center project. It touted its ability in the financial markets and provided a glowing reference for Thomas Beckett, its Senior Vice President, who had 15 years of municipal market experience.

The contracted rate for Beckett was $150 an hour, the same as the controversial Dan Logan, the Medford, N.J. businessman who would work enough hours to be paid almost a million dollars over a four-year period. In one way, however, Beckett outdid Logan. In six months, Beckett’s rate jumped to $225 an hour. Then, in another six months, it was hiked to $275, almost double the original contract.

Fairmount was paid a total of $409,039, almost all of it for hours billed by Beckett.

Beckett’s bills were exemplified by their simplicity and lack of justification for what he was being paid.

In fact, under the Pennsylvania Right-to-Know law, the Authority could produce no substantiating documentation for work done in 2003. There are listings in the monthly Pay the Bills reports in 2003 for Fairmount Capital that total $121,218.51.

It isn’t until April 2005 that Beckett started detailing his hourly billing. Up until this time he merely submitted the number of hours allegedly worked per day. During this period of time he was paid over $280,000 which included about $6,000 in unsubstantiated expenses. At no point does Beckett ever submit back-up receipts for his expenses, yet they are paid without question.

In fact, for 22 months after the contract was signed, Beckett submitted bills that simply listed hours worked. For example, in his Aug. 29, 2004 bill, he has a total of 107.02 hours. That cost the Authority $24,079.50. It is broken down by various dates, but there is no explanation of what Beckett did on those dates, simply “consulting.”

Even when he provides more details there are questions.

The contract required reimbursement for expenses incurred, including “travel,” but there is no indication this would include paying Beckett at his hourly rate for the time traveling between Philadelphia and Lancaster. The contract notes “…we expect these expenses to be modest for this engagement.” No one on the Authority board asked for an explanation.

Beckett does not provide any detail of “travel” hours. In looking at his bills and the length of Authority board meetings he attended, if the meeting lasted only a couple of hours, he might submit a bill for 6.0 hours as he did for Sept. 14, 2004. No one questioned the extra hours.

Beckett provided expertise in the bond markets for the authority. Fairmount Capital touted itself by telling the Authority that “as an independently owned financial advisory firm, Fairmount is not affiliated with any bank or financial services company. The firm believes that its clients are best served when its financial advisor is free from the actual or preconceived conflicts of interest that are created when an underwriting firm also serves as financial advisor.”

That didn’t stop Beckett from a potential conflict of interest.

When it came time to secure an underwriter for the issuance and re-marketing of 2003 and 2006 bonds, Beckett recommended as financial advisor the George K. Baum & Company of Denver, Col. with local offices in West Conshohocken.

Baum’s fees were $130,000. Those amounts came out of the bond issuing proceeds and thus do not show up in the Authority bills.

Apart from the fees received at financing settlements, there was a separate bill from Baum for $25,937.50 for 103.75 hours ofwork at $250 per hour. The bill was for work performed by Baum’s new vice president: Tom Beckett!

Fairmount Capital’s last work was in February 2006. The Baum billing period for Beckett’s work is from March 7, 2006 through May 19, 2006.

Good business acumen? Or conflict of interest?

The board of the Lancaster County Convention Center Authority held its regularly scheduled monthly meeting on Thursday, Jan. 29. The board re-elected its current officers for another year: Art Morris, chair; Laura Douglas, vice chair; Kevin Fry, secretary; and R.B. Campbell, treasurer.

An unusually large number of construction change orders were presented for the board’s approval. The nature of some drew quite a few pertinent questions from board members, especially Art Morris and Laura Douglas. Consequently, the reporting and discussion of change orders took over an hour.

For the first time, modifications made to purchases of Fixtures, Furnishings, and Equipment are being tracked like change orders, in an attempt to bring some accountability to the FF&E procurement process.

An updated document stating the amount and type of liability insurance which must be held by event organizers was discussed and approved. It was explained that all event organizers, even individuals who book space for a wedding reception, must carry at their own expense a specified amount of liability insurance to cover their event.

Still unresolved is the lease between the Historic Preservation Trust and the LCCCA for the Stevens, Smith, and Kleiss buildings. Approval of this lease was once again delayed, since its recommendation for approval by the LCCCA Facilities Programming Committee was contingent upon an approved Memorandum of Understanding between the LCCCA and HPT. This document is far from being completed, since there are still numerous unresolved issues regarding which party will assume what responsibilities for the historic properties and the museum space inside the convention center.

Even though the LCCCA will hold title to the historic properties and museum spaces (and rent it all to the HPT for a dollar a year), the LCCCA expects the HPT to assume near total financial responsibility for construction and maintenance of the parts of the complex it will control. Since construction and renovations to the historic properties has already begun, there is an urgency to complete these documents; a special meeting of the Facilities Programming Committee and/or the full LCCCA board may be scheduled to approve these agreements.

The Jan. 29 article “An unpopular message; Speaker: Sex offenders should get 2nd chance” quotes former state representative Tom Armstrong as telling the Rotary Club:

“…a lot of these sex offenders will never get out of prison” for lack of a place to reside when allowed to leave prison. “It’s destroyed their lives.”

According to the article, “Armstrong said recidivism rates for most types of sex offenders is (sic) about 3 percent or lower. By comparison, he said, half of those convicted of drug and alcohol offenses fail to rehabilitate and then they commit more crimes, and yet they have plenty of housing choices when they emerge from prison.”

WATCHDOG: Kudos to Armstrong for persevering in his educational mission, to Rotary for providing a forum, and to the Intell for prominently publishing the article. Sometimes the editors of the Lancaster Newspapers don’t immediately understand social issues but, once edified, they tend to do the right thing. There is even hope for the New Era!

(NewsLanc has emphasized that the scope of the term “sex offender” is far too broad, bundling those committing relatively minor sexual infractions and indiscretions with serial rapists and pedophiles.)

According to a recent Nielsen Survey, a rare bright spot for newspapers nationwide is increased activity at the web sites.

NewsMax.com reports from the Associated Press, “The latest figures from Nielsen Online underscore the struggles that newspapers still face with how to translate their audiences into revenue. So far, online ads aren’t generating enough dollars to offset losses from print, where ad sales worsened last year because of the recession.”

The article further informs that visitors to newspaper web sites are making much briefer visits than to independent news sites, thus generating far less advertising revenue per visitor.

In response to an inquiry from NewsLanc concerning School District of Lancaster handlng of weather delays in light of needs of working parents and the homeless, Superintendant Pedro Rivera responded “Opening on time has been an ongoing discussion over the past few days.”

NewsLanc had suggested: “All that would be needed is for students to congregate in the cafeterias. There would be four categories: Regular school. Regular hours but not treated as late if up to two hours tardy. School open but two hour delay [of classes.] School closed.”

Rivera added: “I agree that schools must make themselves available as a service to those parents who rely on us to maintain their work schedule, to those students and families who utilize our breakfast program and our buildings.

“Currently we do not have a system that would allow us to stagger the start of the day for select staff, BUT we are currently working on language that will allow us to do just that (we can then sit with the unions to discuss who is affected).

” We WILL work to create a process to accommodate students and their families. We are on the same page as the four options.”