At a special Board Meeting on Tuesday evening, June 30, the School District of Lancaster (SDoL) Board settled on a final budget for the 2009-2010 fiscal year. With a 7-2 vote, the Board adopted the budget as proposed several months ago by district chief financial officer Matt Przywara. Under the budget plan, local property taxes will increase by 3.52%—a modest hike in light of previous budgets and considering the possible 5.8% increase permitted by the State.

The vote comes at a time when a partisan standoff in Harrisburg is holding $6.2 million dollars worth of SDoL funding in limbo. Przywara indicated that the State budget may not be finalized until as late as August.

A “worst case scenario” was detailed for the Board, in which over $6 million could be clipped from the proposed budget. Some of the cuts would include the elimination of all new unfilled and other administrative support positions ($1.6 million), reducing department and building budgets ($1 million), and the tapering of class-size reduction efforts ($2.2 million). Superintendent Pedro Rivera explained that these potential cuts, although painful, have been carefully selected to present minimal impact on the quality of students’ educational experience.

After a failing motion to raise the tax increase to 4.41%, the Board voted to approve the proposed budget as well as the previously discussed tax hike of 3.52% ($79 for a $100,000 property). After the final vote, Board President Patrick Snyder cheerfully declared, “We have a budget.”

Following the budget vote, the Board was given a formal presentation by representatives of Camelot Schools LLC, which the administration has recommend to take over management of Buehrle Alternative School. Camelot runs three similar schools for troubled students within the City of Philadelphia, as well over a dozen other programs throughout the country. The presentation offered impressive figures regarding these schools’ post-secondary placement rates and their graduation rates-between 96% and 100%.

Board Member Jacqueline McCain, who had visited one of Camelot’s operations and called it “wonderful,” expressed some concern about the firm’s policies on physical constraint of students. Camelot representatives said they would provide the Board with thorough documentation to outline the policies, and asserted that these incidents are handled with great care. Staff members are provided with extensive training on how to respond to situations in which a student threatens to physically harm himself or others; and, immediately after the incident, the school initiates a thorough follow-up process that includes a student nurse visit and a special meeting with parents.

Following the presentation, the Board voted unanimously to approve the hiring of Camelot Schools. Next, the administration will negotiate a contract with Camelot, which the Board must also approve.

Courtesy of LookingAtLancaster.com

June 18, 2009 was a cloudy and dismal day in downtown Lancaster, PA. Perhaps this was appropriate for the long-delayed ribbon-cutting ceremony held the day before the official opening of the taxpayer-financed hotel and convention center project. Even more appropriate was the location of the ceremony, held indoors where it was shielded from the light of day, inside the tax-exempt hotel which was used so often by the private “partners” to squeeze more and more concessions from taxpayers.

When the construction bonds for the convention center were sold at the end of March in 2007, the opening date was announced to be on March 1, 2009. Repeated unexplained construction delays resulted in an opening that was one hundred and ten days late.

At the same time, it was announced that the “final” cost of the project would be $177.6 million; no explanation was given as to where the additional funds would come from. Invoices from contractors and vendors are likely to still be submitted for quite a few weeks, so it is possible that the final cost will be even higher.

There is no doubt that the hotel and convention center project will generate a fair amount of economic development in downtown Lancaster. But at what cost?

Over $140 million taxpayer dollars – plus interest – is a LOT of money to create two to three hundred low-paying service jobs, especially considering that the cost to keep the convention center open – including lost real estate tax revenue – will amount to several million dollars every year, basically forever. This amounts on a negative return on investment, no matter how the facts are spun.

To add insult to injury, as of June 18, 2009 the convention center has only booked a little more than half of the total revenue which was expected for the 2009-2010 fiscal year. At this late date, it is highly unlikely that any more major events will be booked before the current fiscal year ends on March 31, 2010.

Particularly weak has been the market for “other” events: competitions, galas/ceremonies, entertainment, and meetings/conferences. As of June 18, 2009 only 29.1% of expected business had been booked for the current fiscal year. This is most likely because the vast majority of smaller events are being booked in the hotel’s space by the joint manager of both the hotel and convention center. A certain amount of this may be attributed to groups booking hotel rooms that are given the use of meeting space for free, thereby avoiding the convention center’s booking fees.

Looking beyond March of 2010, things look even worse. “Other” events booked are above expectation, only because of one large “competition”. But the real money makers are “tradeshows”, which are booked from 12 to 36 months in advance; only a single one-day event has been contracted for the next fiscal year, and into the future.

(These facts and figures were taken from Interstate Hotels and Resorts’ presentation to the Lancaster County Convention Center Authority’s Public Relations, Marketing, and Hospitality Committee on June 18, 2009, which can be downloaded at this link)

Further clouding the future of the convention center is the announced resignation of LCCCA board chairman Art Morris at the end of July 2009. Former Lancaster mayor Art Morris brought an accountability to the project which was lacking throughout its previous history. As acting executive director of the project in 2007 (a position which he had volunteered for), Art Morris – working closely with fellow board members R.B. Campbell and Laura Douglas – uncovered millions of dollars in deficiencies inside the construction budget which was created by his predecessors. Mr. Morris was able to prevail upon former State Sen. Gib Armstrong to come up with yet another three million State taxpayer dollars in an attempt to make ends meet.

Art Morris leaves the hotel and convention center project at a critical time: not all of the construction bills are in yet, and no one knows exactly how much money the convention center will lose now it is operation. Whoever replaces Art Morris as LCCCA chairman will likely soon find themselves begging the County Commissioners to increase the “hotel tax”, in order to keep the convention center open for business.

The downtown Lancaster, PA taxpayer-financed hotel and convention center project has been controversial ever since it was first proposed in mid-1999, ten years ago. In spite of heavy “spin” by project supporters and the local mainstream media, this project will remain controversial for the remainder of its existence.

Lately, NewsLanc has been hearing from local citizens who had only learned of the Marriott Hotel’s tax-exempt status in the wake of the recent grand opening. One reader commented, “Did I miss something? I thought the tax revenues were the big selling point.” Indeed, those who met the tax exemption announcement with surprise did miss something: This legal arrangement has been essentially in the bag since 2005.

In the late 90s, the Watt & Shand building had rested vacant for several years, and was becoming a dim monolith on the southeast corner of Penn Square. Around this time, a proposal was put forward to renovate the historic structure into a new Lancaster branch of the Harrisburg Area Community College (HACC). This proposal, of course, did not ultimately come to pass. And ironically, one prominent criticism—from City Hall on down—was that this operation would have to be exempt from real estate tax.

Flash forward to the Spring of 2005: The Penn Square Partners (PSP), owners of the Watt & Shand property, were aggressively pursuing plans to develop the space into a luxury hotel in accordance with the Convention Center Authority’s approaching project next door. That March, the PSP approached the School District of Lancaster Board, requesting special tax breaks to ease the cost of construction. The PSP stressed to the SDoL Board that their compliance with this financing plan would make or break the project.

Despite immense pressure from a number of public figures in support of the project, the School Board did not approve the PSP’s financing plan, instead endorsing a plan of its own, which would allow for some tax exemption, but required higher rates and stronger guarantees of compensation. The PSP rejected SDoL’s plan as financially impossible, and, days later, declared the project “dead.”

Even as workers began scraping promotional Marriott signs from windows of the Watt & Shand, then-Mayor Charlie Smithgall worked relentlessly to find a solution that would save the project, which had already lined up millions of dollars in State-level grants.

Within weeks, Smithgall offered his solution: The Redevelopment Authority of the City of Lancaster (RACL) would buy the Watt & Shand, more or less eliminating the property from local tax rolls and bypassing opposition from the School District. The PSP could then lease the property from the City, which would also share considerable responsibility for much of the PSP’s construction debt. The next month, City Council approved the measure, establishing an arrangement that has remained largely intact.*

On the day of the Convention Center/Marriott June 2009 opening, the Lancaster County Property Assessment Office deemed the Marriott Hotel tax exempt. This announcement—which could not technically occur until the facility opened for business—was little more than a formality, only confirming what City Council had assumed four years ago in approving the leasing arrangement with PSP.

At the Tuesday evening, June 30, County Commissioners Meeting, the Board will vote on a request from the Mental Health/Mental Retardation/Early Intervention (MH/MR/EI) Program to conduct a comprehensive Efficiency Study of all County Human Services departments. If approved, the $82,000 study will be paid for by existing funds in the MH/MR/EI budget.

James Laughman, Executive Director of MH/MR/EI, explained the goals of the study: “The primary purpose of this contract…would be to look at efficiencies in human services departments for Lancaster County. What the Brinkley Kanavy Group would do is specifically look at fiscal operations and also look at clerical…operations.” The final deliverable, according to Laughman, would be an executive summary of overall recommendations along with a detailed assessment of operations within these departments.

Laughman cited one area in which department efforts could be more effectively streamlined: “Whether you’re billing for Children and Youth, Drug & Alcohol, Mental Retardation, or Office of Aging, you’re all billing under billing codes. The codes my differ, but the processes that you go through is extremely similar.”

The resulting recommendations may include the alignment or elimination of certain positions, Laughman noted. However, he stressed that the report will merely provide recommendations. The response to these recommendations will fall under the discretion of the Commissioners.

In May, Laughman somberly presented the Commissioners with the Lancaster County Mental Health Plan for Fiscal Year 2010-2011—a plan expected to be met with considerably insufficient State funds. At the heart of this proposed Efficiency Study is the desire to see the narrow funding for Human Services result, as directly as possible, in the provision of actual Human Services.

The Editorial “New Era: Voice for Republicanism” goes on to say “New Era editorials will speak out forcefully issues, large and small, and offer solutions that reflect the spirit of Republicanism.”

WATCHDOG:  Whose “Republicanism?” Dwight D. Eisenhower’s or George W. Bush’s?

Indeed, are local issues subject to such interpretations, in which case are we to assume that the New Era vigorously opposed the largely tax payer funded and guaranteed Convention Center Project despite its publisher’s sponsorship of the project? We don’t recall that.

It is heartening to be advised that the New Era supports “pro-life”, “right to bear arms’, “freedom of speech,” “freedom of religion,” and is “for the Bill of Rights as written.” But aren’t these nuanced issues?  Where will the New Era stand on stem cell research? Does the New Era support assault rifles and armor piercing bullets?

Are Democrats really against free speech and freedom of religion? Do Democrats have another version of the  Bill of Rights? Strikes us that liberals are trying to restore the Fourth Amendment concerning search and seizure. Yes, there are more than two amendments!

The Watchdog was a Republican for most of his life.  Eight years ago he registered Democrat.  He misses the Party of Eisenhower, Nixon (far more progressive than most realize), and George H. W. Bush. (Notice someone missing?) If the New Era doesn’t speak to all of the Republicans who have been forced to become independent or Democrats, their editorials will be more canned rants than opinion pieces.  And the Watchdog won’t be able to come home.

(Eighteenth in a series)

By Christiaan A. Hart Nibbrig

When Governor Tom Ridge signed the Stadium Bill in the first days of February, 1999—adding half a billion dollars to the Pennsylvania state capital budget—Lancaster County was virtually promised a $15 million check to build a downtown convention center.

“I figure, if we get that $15 million egg, somebody will sit on it,” Mayor Charlie Smithgall said to the Lancaster New Era.

Almost immediately, the project, which had been at the discussion stage for years, and enjoyed seemingly unanimous local support, began to change significantly.

The comity, civic high-mindedness, and community involvement that had marked the project’s early planning vanished, replaced by a lack of transparency, ‘old boy’ patronage, and an apparent absence of due diligence on basic questions of feasibility. These questions, never fully answered, would define the next tortured decade of the Lancaster County Convention Center and Hotel project.

The first and most obvious change was the physical location of the proposed center. The much promoted LDR International (“Winterbottom”) Report of 1998, commissioned by the Lancaster Campaign, recommended a “conference center” located in Lancaster Square on North Queen Street, adjacent to the Brunswick Hotel, which Winterbottom suggested be extensively renovated.

Another study, conducted by the Pinnacle Advisory Group, and also commissioned by the Lancaster Campaign, recommended the Lancaster Square location, too. The Pinnacle study was never released.

After Ridge signed the bill, the only site discussed publicly was the Penn Square location of the former Watt & Shand building, across the street from the Fulton Bank and the Lancaster Newspapers’ buildings. No public explanation was given at the time for the switch. “We were the prime location [for a convention center];” the Brunswick’s marketing manager said to the New Era, “for whatever reason the winds had shifted to Penn Square.”

Mayor Smithgall said recently the location of the center was moved to Penn Square because the owners of the Brunswick, a Philadelphia-based corporation, would not return his phone calls, but this was not reported. [A senior executive of the company, G&F Management, Inc., declined to comment on negotiations between his firm and the city of Lancaster, or on any personnel matter concerning any current or past employee.] Daniel Logan, a controversial consultant hired later by the Convention Center Authority and paid nearly a million dollars, was then the local representative of G & F Management.

The historic Watt & Shand building was purchased the previous year by Penn Square Partners, a limited partnership consisting of High Real Estate as General Partner with a 45% interest; the Lancaster Newspapers as a limited partner with a 45% interest; and Fulton Bank as a limited partner with a 10% interest. The price was $1.25 million. The CEOs of the partners respectively were S. Dale High, Jack Buckewalter and Rufus Fulton.

The cost of the convention center also changed dramatically. Winterbottom’s estimate was $6 million for a center at the Brunswick site; now, the cost was blown up five times, to $30 million, plus another $45 million for the “Four-Star,” “Luxury” hotel that would now be built by Penn Square Partners.

In order to receive the $15 million from the state, funneled through the Department of Community and Economic Development (DCED), the county had to match, dollar-for-dollar, the Commonwealth grant.

The local legislative mechanism several other Pennsylvania counties used to get the matching funds was the levying of a countywide hotel and motel room tax. This levy—enacted by the county commissioners, collected by the county treasurer, and administered by a public convention center authority—allowed a tax on each hotel and motel room rental at a rate between 0.5% and the statutory limit of 5.0 %. The tax money would be used to pay back money borrowed to build the center.

The enabling state legislation—The Pennsylvania Third-Class County Convention Center Act of 1994—was written and championed by the powerhouse law firm of Stevens & Lee. The Reading-based corporation was also the registered lobbyist of High Industries, the General Partner of Penn Square Partners. Stevens & Lee was also the long-time solicitor of record for Lancaster County, in this capacity for more than a decade.

By 1999, Stevens & Lee could list among its many clients, Berks County (Pa.) and the Berks County Convention Center; and Luzerne County (Pa.) and the Luzerne County Convention Center.

Until this point, the senior Lancaster County state legislative representatives—House Appropriations Chairman, Rep. John E. Barley, and Sen. Gibson E. Armstrong—strongly supported the convention center concept, but both gave similar caveats for their support.

“I wouldn’t be interested in doing this [implementing a hotel room tax] unless I had the support of the affected community—the hotel people,” Barley said to the Lancaster New Era.

Armstrong echoed his colleague. “The hoteliers have to support it,” said the senator.

Republican County Commissioner Terry L. Kauffman seemed to be reading from the same memo: “It can’t compete with existing businesses. It has to help them.”

The problem was that the “existing businesses”—Lancaster County’s hotel and motel owners—didn’t think the convention center and hotel project would help them at all.

Rodney Gleiberman is currently, and was in 1999, the general manager of the 165-room Continental Inn on Lincoln Highway East in suburban Lancaster, near the popular outlet malls and the Dutch Wonderland amusement park. His father, Michael Gleiberman, with whom he co-owns the Continental, has developed more hotel rooms in Lancaster County than anyone.

“If I felt that this project offered any upside to my business, I would support it,” says Gleiberman today. “The reality is that this hospitality project has zero un-interested support from within the local hospitality industry, as it is not grounded in a complete and thorough feasibility study, any reasonable anecdotal nationwide track record, or the slightest bit of common sense.”

Gleiberman wasn’t the only hotelier to hold this view. He is one of dozens of hotel and motel owners that form the membership of the Greater Lancaster Hotel & Motel Association (GLHMA). The organization’s businesses represent more than half of the total rooms available in the county.

In the summer of 1999, before the tax was voted on by the Lancaster County Commissioners, GLHMA conducted a survey of 58 hotels listed with the county’s Pennsylvania Dutch Convention & Visitor’s Bureau (PDCVB). Of the 58 establishments, 54 voted against the project; three abstained pending more information. There was only one supporter among the hotels contacted—the Hampton Inn, owned by High Hotels, a subsidiary of High Industries, a partner in the project.

Peter Chicarrine, part of the executive management of the 280-room Eden Hotel and Resort and GLHMA member, said to the New Era. “Before we spend $30 million for a facility and another $45 million for a hotel, I think we should get the facts, and nobody has done that.”

Another GLHMA member, Tom Zeager, owner of an historic inn in Strasburg, was more blunt. “I think this will be a white elephant on the backs of the taxpayers. I don’t think it will work.”

The underlying economic justification for building a publicly financed convention center and adjoining 281-room privately-owned hotel was a $60,000 study commissioned in February, 1999, and fully funded by the Lancaster Campaign. The Ernst & Young “Market Study, Cash Flow Estimates, and Economic Impact Analysis,” released to the Campaign in July of 1999, was the basis for the feasibility of the project.

The first striking thing about the Ernst & Young study is that it isn’t a feasibility study at all. In the world of real estate appraisal, “Market” and “Feasibility” studies are distinctly different by definition. Ernst & Young intentionally called its report a “Market” study because it was not the much more substantial and comprehensive “Feasibility” study, which includes, among projects of profits and losses, a market study. Ernst & Young worked in a world where these terms were clearly an established part of the nomenclature of the business.

(The only actual Feasibility Study of the project was performed in 2006 by industry leader, Pannell, Kerr, Forster (PKF). The PKF report was jointly underwritten by the County and Robert E. Field, a local businessman, philanthropist, and publisher of NewsLanc.com. The PKF Feasibility study showed that many of the fundamental assumptions of the project were flawed, and that the revenues from the tax would not pay the operations costs of the center and the debt service on the massive taxpayer guaranteed borrowings.)

The second noteworthy aspect of the Ernst & Young study is the secrecy with which the report was released. Again, unlike the Winterbottom study of the year before, which held several public meetings that included organizations and regular citizens, the methodology of the Ernst & Young report was limited primarily to discussions with certain government officials, and a few carefully selected representatives from the hospitality industry. The community and some government officials were conspicuously left out of the process.

A reading of the report suggests why it was kept secret. While Ernst & Young concludes that a 61,000 square foot convention center and a 281-room adjoining hotel is the “most appropriate” of the four “scenarios” it analyzed, the report was very clear that a much more thorough study was needed. “It is important to note,” the Executive Summary states, “that this does not take into account the estimated costs associated with the development of each Scenario, the financial feasibility or the anticipated returns”. [Emphasis added.]

Moreover, the Ernst & Young study lists 23 “Critical Success Factors” for the project. The report names only three “Competitive Strengths” for the Lancaster project (costs to attendees; event costs; road access from major feeder markets). There were a total of seven “Competitive Weaknesses,” (air access; cultural and entertainment attractions; population; industry concentration; historical demand for lodging/meeting facilities; market image; other quality of life issues.) It seems Ernst & Young thought Lancaster had more going against it than for it.

The release of the Ernst & Young report was also handled very differently from the Winterbottom study, which was highly publicized and freely disseminated. The Lancaster Campaign’s Chairman, Tom Baldrige, promised the GLHMA members a complete copy of the report would be available to them.

In a letter to Allan Erselius, Executive Director of the PDCVB, August 12, 1999—four weeks after receiving the completed Ernst & Young report—the Campaign’s Baldrige rescinded his offer to the hoteliers to release the complete Ernst & Young study.

“At the most recent meeting with hoteliers,” Baldrige writes, “I assured them that they would get copies of the complete Ernst & Young study as a means to further their due diligence on the project. Unfortunately—and with much apology—I have been informed by Ernst & Young that I am not permitted to share the complete report.”

The full report, which was finished in mid July, 1999, was not released publicly until after the County Commissioners passed the Hotel and Motel Room Sales Tax on September 15, 1999.

“Unlike commercial media which must strive for circulation and viewers and do not want to offend advertisers, NewsLanc.com does not hesitate to praise and to criticize. No individual or institution is exempt.

Our purpose is to protect the public from the foolish, the provincial, the greedy, and the predatory.

Our mission is to help create a better Lancaster.

If you don’t occasionally get angry at what we write, we are not doing our job. And if you stop visiting because an article made you angry, then you don’t appreciate what NewsLanc is about.

Instead, write us a letter for anonymous publication and take us to task! NewsLanc should be a forum, not just the product of staff.”

Two articles that appear on the June 28 Sunday News when juxtaposed provide revelations concerning the economic impact of the Convention Center Project on the hotel industry.

“Kneeded: Hundreds of guest rooms for pretzel maker” relates that Josh Nowak of Interstate Hotels & Resorts claims that the Auntie Anne’s event will require hundreds of additional guest rooms beyond those available at the Marriott. Later the articles says “Others will generate a significant number of overnight stays, such as the Mid-Atlantic District Barbershop Chorus Contest scheduled Oct. 2-3″ although only the Barbershop Chorus Contest, scheduled only for one night, Oct.2-3, is mentioned.

According to another article “Room tax revenues are on the decline”, the hotels in the county are taxed approximately $6 million dollars annually to support the Convention Center project. For the half of 2009 that remains, that amounts to $3,000,000

Okay, let’s give the Project the benefit of the doubt and say that it will generate a total of 2000 guest room nights yet this year beyond those accommodated by the Marriott. That’s for half a year.

Two-thousand room nights at an average of $100 per night = $200,000 in extra revenue for the regional hotels.

What hoteliers would choose to pay $3 million dollars in Hotel Room Tax in order to generate $200,000 in revenue?

In his weekly column, Gil Smart speaks out “In defense of security cameras.” Smart opines that in contrast to private areas, in public areas “…there is no expectation of privacy and where a camera sees exactly what a cop on the beat might see.  And if we don’t have a problem with the latter, why do we have a problem with the former?”

WATCHDOG: That was also NewsLanc’s position.  But having read the Letter entitled “The Right to Privacy” posted under News & Commentary, we are not quite so sure anymore.

In Marv Adams’ column “It’s a new era, come Monday”, he states:  “A big benefit from the merger is that daily and Sunday editors and reporters will work together to develop more investigative reports…”

WATCHDOG: It will indeed be a “new era” the day the Intell of Sunday News runs an investigative report on any advertiser or member of the establishment. Perhaps Adam means more crime reporting and puff pieces.

Can you imagine even Gil Smart taking on Lancaster General Hospital for misdirecting their third highest in the state earnings, largely derived from a monopoly position, almost entirely to hospital expansion while skimping when it comes to public healath?  (Case in point: At least 600 heroin addicts going without Suboxone treatment due to doctor apathy and lack of funds, thus generating crime, destroying families, and straining the social safety net.)

Or how about challenging some of the ongoing mendacities emanating from John Fry and his stooges from the executive staff at Franklin and Marshall College. (We are proud of the College; we are ashamed of Fry.)

Would the Sunday News care to investigate how Dale High managed to siphon the greater portion spent on the Convention Center Project into his companies’ coffers, mostly without competitive bidding?

The answers to all three:  We don’t think so!