Forty-fifth in a series by Christiaan Hart-Nibbrig

“These municipal authorities are a ’shadow government.’ They have little accountability. They’re appointed, not elected. They wield an insane amount of power, and spend millions of taxpayer dollars. It is very troubling. It’s time to take a close look at them.”

– Pennsylvania State Representative Jesse White (D-46^th) in an interview with NewsLanc. White has sponsored three bills (HB 1715-1717) aimed at strengthening oversight of Pennsylvania’s public authorities.

After the Lancaster County Commissioners voted in early 2006 to hire the consulting firm of Pannell, Kerr, Forster (PKF) to conduct the first feasibility study on the by then $145 million convention center project, the firm’s lead consultant, David Arnold,  was surprised to learn that he would not be receiving any cooperation from the Lancaster County Convention Center Authority (LCCCA).

In declining to participate in the study – a study ordered by one of the two governmental bodies that birthed the LCCCA – the convention center authority offered a glimpse into the unusual power and autonomy of municipal public authorities.

Especially in Pennsylvania, where there are more than two thousand, municipal authorities play an enormous, but largely unobserved, role in providing and financing services and projects ostensibly in the interest of the general public.

These special governmental units, whose board members are usually appointed by one or more regional governments, address services and infrastructure development such as parking, toll bridges and roads, solid waste disposal, sanitary sewer, and water.

The Lancaster Area Sewer Authority (LASA) is an example of such a multi-municipal authority.

The LCCCA was established by joint resolutions passed by both the County and City of Lancaster in 1999. In one meeting, on September 14 of that year, Lancaster County Commissioners passed ordinances 44, 45, 46 establishing the LCCCA and imposed the hotel room rental tax, an excise tax dedicated to convention center development and the county’s tourism agency, respectively. Later that evening, the Lancaster City Council passed a resolution forming the LCCCA.

Although the resolutions at one point empowered a feasibility report, the thrust of the Paul Thibault led county commissioners’ resolutions was to direct the LCCCA to develop a convention center, not to evaluate the need for one.

The county room rental tax provided 80 percent of the five percent room tax levied on every hotel and motel across the 940 square mile county.  This single act provided a revenue stream of about three million dollars per year – $250,000 per month — to the seven-member authority board to administer the project as they saw fit. Moreover, so long as there was debt remaining on the project bonds (which was under the control of the LCCCA), the tax, by law, could not be reduced nor eliminated by the county commissioners.

To lock this in place, the outgoing Thibault board arrange for a bond for $40 million through a bank,  of which only a tiny portion of the funds were drawn down, and future county commissioners were effectively blocked from repealing the room sales tax.

In 2006, the four city-appointed members of the LCCCA board of directors (who serve part-time without compensation) consisted of a director of the local Boys Club; a journeyman electrician with the local power plant; a mid-level school administrator; and a co-owner of a heating oil supply company. What board members Willie Borden, Joseph Morales, and Dave Schwanger did not possess was any experience in the hospitality industry, nor in building and running multi-million dollar projects with complex financing agreements.  (ChairmanTed Darcus had been president of City Council.)

By sharp contrast, the three county appointees had relevant professional experience related to multi-million dollar businesses. But the county-appointed members were three, not four, of the LCCCA board . . and that one seat plurality made all the difference.

Municipal authorities are usually one of two general types: a financing authority, or an operating authority.

A financing authority is generally used as a funding mechanism to take advantage of the tax benefits for which an authority can often qualify as a non-profit, tax-exempt borrower. This type of authority usually functions as a borrowing conduit to finance projects and/or services.

An operating authority, like the LCCCA, is usually tasked with building and operating a specific project or service, with the expected revenues applied to the authority’s expenses and debt service. An operating authority still has the advantage of issuing tax-exempt bonds.

A difference between the LCCCA and most other operating municipal authorities is that the Lancaster center, according to the LCCCA’s own financial advisers, was not projected to generate enough revenue to cover its debt and operating costs.

Therefore, after operating costs and debt service payments, should the LCCCA find itself with an ongoing deficit despite the current hotel room tax supplement, the authority would eventually have to find another revenue source to meet its financial obligations. Such a shortfall would endanger the county tourism bureau’s twenty percent of the room tax, which the LCCCA could appropriate in order to make up all or part of its shortfall.

State law permitted the county commissioners to raise the current five percent to as much as seven percent.  The raising of the room tax, with its potential negative impact on attracting travelers and on earnings, concerned project critics.

The LCCCA did not hire a professional executive director until three years after the authority was established. It is rare for an authority, let alone one charged with building a projected $145 million capital projects, to not have a professional executive director running the day-to-day operations from almost the start.

Retired Jim Pickard served as a part-time volunteer executive director for the first critical years. The Authority effectively turned its planning, negotiations and decision making over to the law firm of Stevens & Lee, to various consultants, and to an affiliate of The High Companies which acted as developer for the convention center. Stevens & Lee, the LCCCA’s solicitor, was also the law firm of record of The High Companies, of which another affiliate was the general partner of Penn Square Partners.

It was not until the spring of 2002 that the LCCCA board hired its first professional executive director, Michael Carper. Carper, a highly qualified former president of a prominent local property management company (Horst), resigned within six months. He made no public comment regarding his resignation, other than to say he was pursuing other opportunities.

In September of 2003, ten months after Carper’s resignation and after spending several million additional dollars, the LCCCA hired David M. Hixson as its executive director on Pickard’s recommendation.

Hixson, who was then 37, had six months experience as  “principal adviser” in the state Department of Labor and Industry. Prior to that, Hixson spent the bulk of his professional life in the public relations offices of then-Congressman Tom Ridge, and Lt. Gov. Mark Schweiker.  At the time, few if any questioned why Hixson, a public relations flack, was being engaged to oversee a hundred million dollar project.

Hixson proved to be as dependent on Stevens and Lee  as Pickard.  Often during public meetings Hixson turned for advice from attorney Espenshade.  ChairmanTed Darcus would only permit comments or questions from the audience during a period allowed at the outset of meetings.  Furthermore, it was his practice not to permit board members to respond to questions.

A municipal authority like the Lancaster County Convention Center Authority is, or is supposed to be, an independent public governmental body. It is subject to the same open records and ‘Sunshine’ laws as elected government offices. Authorities must hold public meetings with adequate public notice, respond to right-to-know requests, and perform due diligence in their capacity as stewards of public funds.  But otherwise, an authority is accountable to no others including the entities that originally created it.

Therefore, their oversight falls squarely within the purview of a vigorous, independent press, the so-called ‘Fourth Estate,’

For most of the 20th Century, the three Lancaster newspapers – the morning Intelligencer Journal, afternoon Lancaster New Era, and Sunday News – provided Lancaster County with competent and, at times, distinguished local coverage. The editorial pages of each of paper were meant to operate quasi-independently, with the Intell taking a more Democrat, or progressive perspective, and the New Era leaning Republican and to the right.  The Sunday News was typically a weekly summary and analysis of the major events of the week, and was heavy on religion. Its editorial page was closer to the New Era’s.

But a change in the quality of reporting began to emerge in 1999, the year that the LCCCA was formed and when the newspapers’ parent company had become a major investor in Penn Square Partners.

Lancaster Newspapers was an equal equity partner with General Partner, High Associates.   However, Lancaster Newspapers did not report its percentage of ownership in the project until a court hearing in 2006, seven years after the project officially commenced.

On August 26, 1999, the newspaper coverage of a public meeting before the key September county commissioners’ room tax vote blared a banner headline:

“PENN SQUARE COMPLEX IS HAILED AS ‘EVERYTHING THE CITY NEEDS’;  STRONG PRAISE FROM CROWD OF NEARLY 300.”  The article began: “In a display that united old foes and bridged city-county and Republican- Democrat differences, county leaders have embraced plans for a $75 million downtown hotel and convention center with almost religious zeal.”

Only buried deep in the article were the objections of the hotel and motel owners who would be funding the “complex.”

Weeks later, after the tax was passed, which came with banner headlines and front-page stories, the pro-project reporting and omissions continued. For example, none of the Lancaster papers reported that the representations of sponsors that the project had feasibility studies performed were incorrect!  They were only market studies which do not deal with profits and losses. (The first feasibility study was actually conducted in the spring of 2006, and it concluded the project should be “downsized” or another use of the Watt and Shand site found.)

The selection of city-appointed LCCCA board members, seemingly chosen for compliance, despite inexperience, was never discussed, let alone challenged.

Lancaster Newspapers did not report on the role of Stevens & Lee representing the county and LCCCA, while also being the registered lobbyist for The High Companies. This potential conflict-of-interest where Stevens and Lee had represented or was representing both the private and public parties to the transaction was not a subject of concern to the Lancaster Newspapers.

In attacking the questions raised by the county commissioners, the Lancaster Newspapers editorialized that the majority of people supported the County Commissioners guaranteeing convention center bond debt.  The salient determination of the Fox 43 county poll that 78 percent with an opinion opposed county guarantees for the project debt was not included in reports in any of the three Lancaster Newspapers. (Robert Field, who underwrote the cost of the survey, took out a half-page advertisement in the morning and afternoon newspapers to publish the entire report and show the vast public opposition.)

The newspapers reporting claims that there was “No Plan ‘B’” if the school board turned down the tax abatement proposal while its management knew a ‘Plan B’ by which the City of Lancaster would own the hotel for twenty years had already been developed months earlier and was waiting in the wings.

Lancaster Newspapers also accepted without analysis the LCCCA’s bid overage representation in the spring of 2006. The amount of the overage was understated by $12 million!  The Sunday News ran a correction article after LCCCA board member Laura Douglas’ revelation.

When the Executive Director of Common Cause, Barry Kauffman, wrote a letter to Pennsylvania Governor Edward G. Rendell, urging the Governor to direct the Auditor General to investigate the LCCCA, it merited only a single sentence that was  awkwardly buried in the fifteenth paragraph of a barely related article.

The millions of dollars of taxpayer money that went to private consultants and massive legal bills, and the subsequent one-sided agreements between the authority and the private hotel partners, were reported only superficially.

In a letter to a Lancaster Newspapers reporter, Robert Field wrote: “Instead of running a newspaper, Lancaster Newspapers have become a propaganda rag.” Field, who had recently launched NewsLanc, publicly called for the newspapers to engage an ombudsman to examine and evaluate the fairness of newspaper reporting.

Later, the newspapers were to play major role in suggesting the project was in deep trouble and, at one point was dead, a possible deception which implications will be examined later in this series.

Thus Ted Darcus and his three allied city appointees on the board went unfettered by Fourth Estate scrutiny and resulting public opinion.

Forty-fourth in a series by Christiaan A. Hart Nibbrig

The Lancaster County Convention Center and Hotel project was originally conceived as a $75 million project ($45 million private and $30 million public). The final cost of construction: nearly $180 million.The final cost estimates do not include a new parking garage, or interior work that will be done to any of the historic properties adjacent to the development. All but $11 million of funding is either taxpayer dollars, or guaranteed by the taxpayers.

1992

FebruaryThe 115 year-old landmark and historic Watt & Shand department store is sold to the York-based Bon-Ton Stores, Inc. Three years later the downtown store is closed.

1993

June

The Lancaster Alliance is formed. The non-profit Alliance is comprised of twelve prominent business leaders. The group includes S. Dale High, Jack M. Buckwalter, and Rufus A. Fulton, who would later form a small private partnership, Penn Square Partners, that would build a Marriott Hotel on Penn Square. High, Buckwalter, and Fulton, along with retired CEO of Armstrong Industries, William Adams, form the “executive committee” of the Alliance.

1994

December

The Pennsylvania Third Class Convention Center Act is signed into law by Governor Robert P. Casey. The law allows counties to impose a room rental tax to build convention centers. The bill was written by the Reading-based Stevens & Lee law firm, which 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.

1995

February

Bon Ton executives encourage Harrisburg Area Community College (HACC) to move into the former Watt & Shand building. The move is supported by Democrat mayor Janice Stork and several business leaders, including Lancaster Newspapers’ CEO, Jack Buckwalter.

March

Bon Ton, Inc. closes downtown Penn Square store. The historical landmark Watt & Shand building will sit vacant for more the next decade.

Paul R. Thibault upsets incumbent county commissioner James Huber in the March 17 Republican primary, virtually assuring election in November in overwhelmingly Republican Lancaster County.

November

Paul R. Thibault is elected Lancaster County Commissioner. Thibault, Connecticute born, raised in Canada, was not endorsed by the county Republican party. He did have the endorsement and substantial financial backing of the Lancaster Alliance. Thibault becomes chairman of commissioners’ board upon election.

1996

July

HACC trustees vote to purchase the Watt & Shand building. HACC counts on more than $8 million in state funding.

Lancaster Campaign, a private subidiary of the Lancaster Alliance, is formed. Thomas Baldridge is named Executive Director. The campaign’s stated purpose to improve Lancaster business and culture.

November

Former Lancaster mayor Art Morris criticizes the HACC plan. “I have a number of concerns, but a significant one is the tax base of this city,” Morris says. The ex-mayor makes no such objections when the property is later taken off the tax rolls.

The HACC plans call for razing slightly over 25 percent of the total space to make room for 90 parking spaces, an unloading area outside a day care center, and an outdoor play area. The Watt & Shand facade would be preserved.

The college plans to move from its campus at Burle Industries to the downtown site in the fall of 1998, using 75,000 square feet, with long-term plans to double that usage. The county plans to move in at about the same time, leasing 30,000 square feet for five years.

1997

March

HACC application denied by state department of education on March 27, killing the move of the community college downtown.

July

Lancaster Campaign hires LDR, International to “create a diagnosis and prescription for revitalizing Lancaster.” The LDR study is headed by Bert Winterbottom.

November

Lancaster pharmacist, Republican Charlie Smithgall, is elected mayor. Smithgall was an outspoken and vigorous opponent to the HACC plan.

1998

January

Smithgall takes office on January 4. Former Pennsylvania Commerce Secretary, James O. Pickard, is named special economic advisor to the mayor. Pickard takes no salary, but says one of his primary aims is “finding a use” for the Watt & Shand building.

On January 12, Lancaster city officials announce the city will buy the Watt & Shand building. “We’re in serious negotiations. I’m very optimistic,” Smithgall’s economic advisor James Pickard is quoted in Lancaster Newspapers.

A spokesman for Bon-Ton confirms that a sale appears imminent. “I’d say the discussions are focused on legal issues,” the spokesman says. “I don’t think there are any impediments out there.”

Pickard says the cost of the building will be “substantially under the $2 million.” Pickard says private investors will lend that money interest-free to the city to make the purchase. The city’s action forestalls a public auction of the building, a move that officials like Smithgall fear could put ownership of the building into the hands of an out-of-town speculator.

Pickard says he expects the city will sign an agreement to buy the building within a week, and will settle on the property by the end of February. He says he hopes to see the building in the hands of a private developer within six months.

The partnership of Penn Square Partners is formed. High Associates is the General Partner, with Lancaster Newspapers and Fulton Financial limited partners. It is announced the the Partners are negotiating to buy the Watt & Shand building.

February

Watt & Shand building is purchased by Penn Square Partners from the Bon-Ton for $1.25 million on Feb. 17. “We’re looking at all the options,’ says Dale High, president and CEO of High Industries Inc., parent company of the real estate group. “We see it as a mixed-use building.” [emphasis aded]

The LDR Plan, aka, “the Winterbottom Study,’ is released. It suggests: “Build on the visual impact of the ‘New Lancaster Square West’ to create an opportunity site on Lancaster Square East for a small, state-of-the-art conference center of approximately 40,000 – 50,000 square feet. Work with the new owners of the Hotel Brunswick to assure the hotel’s linkage with the conference center, and that its redevelopment includes not only interior renovation, but an external, architectural enhancement of the building façade – an entirely new image. All of this will create a major ‘people place’ for Lancaster and establish the city as an important visitor destination.” “With upgrading of the [Brunswick] hotel,” wrote Winterbottom on page 52 of the report, “there is the opportunity to create a small, state-of-the-art conference center and additional hotel space.” Winterbottom’s cost estimate for his “state-of-the art-conference center“: between $6-$7 million.

The Pinnacle study, also commissioned by the Lancaster Campaign, recommends the Lancaster Square location for the center. Lancaster Newspapers fails to push for release of that study. The results are never released.

1999

February

Pennsylvania Governor Tom Ridge, who took office in 1995, signs $750 million Stadium Bill, allowing money for the project to flow to Lancaster. House Appropriations chairman, John Barley, a Lancaster Republican, plays a key role in the passage of the bill. The $15 million in state grants to get the project started is seen as reward for Barley’s role in the Stadium Bill’s passage.

March

The Lancaster Campaign funds another study of the project. The Ernst & Young, “Market Study, Cash Flow Estimates, and Economic Impact Analysis.” The study is released to the Campaign in July.

June

In anticipation of a room rental tax, the Greater Lancaster Hotel and Motel Association (GLHMA) conducts a survey of 58 hotels listed with the county’s Pennsylvania Dutch Convention & Visitor’s Bureau (PDCVB). Of the 58 establishments, 54 vote against the tax-dependent project; three abstain pending more information. There is only one supporter among the hotels contacted —the Hampton Inn, owned by High Hotels, a subsidiary of High Industries, a partner in the project.

July

The Ernst & Young report is released, and is used by the sponsors’ to justify the “feasibility” of the project. “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.]

August

The release of the Ernst & Young “Market Study” of 1999 is also handled very differently from the Winterbottom study, which was highly publicized and freely disseminated. The Lancaster Campaign’s Chairman, Tom Baldrige, promisedsthe 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.

Ernst & Young also said in its report: “We also believe that the county commissioners should impose a room tax on hotels throughout the county to help pay to build the convention center and to promote tourism in both the city and county.”

September

In three separate resolutions, numbers 44, 45, & 46, on September 15, the three Lancaster County Board of Commissioners, under the Third Class County Convention Center Act of 1994, voted unanimously to establish the Lancaster County Convention Center Authority, impose two taxes: a 3.1% hotel/motel room tax and a 1.9% excise tax. Twenty percent of the room tax, and the excise tax would go to the Lancaster Dutch Convention & Visitors Bureau. The rest would go to the Convention Center Authority. The taxes would be levied solely on the hotel and motel owners of Lancaster County. The taxes would commence January 01, 2000.

October

In Harrisburg, on October 19, Armstrong introduced an amendment to House Bill 148, originally intended to authorize county appropriations for Flag Day observance, and used that pretext to re-enact the Convention Center Act with a single change. Armstrong changed only the scope of the Convention Center Act. This was known afterward as the “Armstrong Amendment. Here is the original language of the 1994 Convention Center Act:

“This Act shall not apply to a county which has an existing convention center which covers an area of more than 40,000 square feet.”

This is Armstrong’s 1999 change:

“This subdivision shall not apply to a county which has an existing convention center owned by, leased by or operated by an existing authority or the Commonwealth with covers an area of more than 40,000 square feet.” [underline added]

By amending the scope of the Act, Armstrong rendered the principal legal challenge on Section 13102 invalid.

There was not a single word of the change – to a law that directly impacted the people and economy of Lancaster County – published in any of the Lancaster Newspapers until after the bill passed the Senate (October 20, 1999) and the House (October 26).

November 5

Standing before nearly 500 cheering people, including the leading Lancaster political and business establishment, on South Queen Street, Gov. Tom Ridge Thursday made a very public display of support for a proposed downtown convention center in Lancaster with an oversized $15 million check.

2000

January 01, 2000. Room rental and excise taxes take effect.

February

Political activist and independent journalist, Ron Harper, Jr. launches website, 5thestate.com. Harper combines facility with digital technology; rabbinical knowledge of the Pennsylvania and U.S. Constitutions; and the physical energy of a hyperactive humming bird, to wreak a most unique kind of civic havoc in Lancaster

March

Oblenders’ property sold to the Convention Center Authority for $625,000.
On March 24, a group of 37 hospitality establishments, large and small, across Lancaster County engage the Harrisburg-based law firm of Mette, Evans, and file a civil lawsuit in the Court of Common Pleas in downtown Lancaster. The suit asks for declaratory and injunctive relief on a total of eight counts of alleged federal and state violations of Constitutional rights.

The hotel and motel owners argue:

“The County Ordinances, the City Ordinance and the Armstrong Amendment, facially and as applied to the Plaintiffs, constitute arbitrary, capricious, irrational and unreasonable regulations and legislation which violates Plaintiffs’ substantive due process rights as secured by the Fourteenth Amendment to the Constitution of the United States…”.

The hotel and motel owners argue that the tax imposed “a substantial burden on the Plaintiffs without a corresponding benefit or with a disproportionately low benefit from the tax revenues.” (The lawsuit is heard first in December, 2000.)

July

The LCCCA-appointed “Tourism Task Force,” recommends the board expand the size of the convention center from 61,000 square feet to at least 100,000 square feet.

“We strongly recommend the authority employ further research to study why the convention center should be initially designed and built to be no less than 100,000 net square feet of exhibit space,” says Bradley Clark, chairman of the task force and member of the LCCCA board of directors at the July meeting.

In addition to Clark, a commercial realtor, the task force members include three representatives from the hotel industry; two restaurant executives, a theater director, a Lancaster Alliance director, and two members of the county visitors’ bureau board of directors.

At its monthly meeting on July 27, the Lancaster County Convention Center Authority approves an operating budget that includes a $750,000 reserve fund for litigation defense. “The $750,000 is an opening number,” Pickard says.

August

At the August LCCCA meeting, the board commissions PricewaterhouseCoopers (Pricewaterhouse), an international hospitality consulting firm, to examine the viability of a larger convention center facility, and essentially re-size and update the Ernst & Young market analysis of 1998. The cost of the new study: $77,000.

As it did with the Ernst & Young report, Lancaster Newspapers reports that Pricewaterhouse was conducting a “feasibility study.” This is misleading. Pricewaterhouse never claims it to be more than a market study, nor did it perform a genuine feasibility study.

Both the Ernst & Young and Pricewaterhouse reports recommended a single or “common” manager for the hotel and convention center.

At the LCCCA meeting on November 8, 2000, representatives from Pricewaterhouse deliver their findings to the board and the public. .

The Pricewaterhouse consultants estimate construction costs for the larger facility could reach $35 million, which could support a facility as large as 114,000 square feet – nearly double the original projected size.

The increase in cost, from the previous high estimate of $30 million, would fall directly on the taxpayers, particularly the county hotel owners.

December

On December 5, 2000, a Lancaster County judge rules that hoteliers can’t use some evidence they had hoped to introduce during their trial. Judge Louis J. Farina decides three key areas of questioning are off limits to attorneys representing the now 11 hoteliers suing Lancaster city, the county and Lancaster County Convention Center over the legitimacy of a hotel room tax.

Farina upholds a request from the county’s attorneys that forbids hoteliers’ attorneys from raising three issues during the trial. They are a 1998 convention center study completed by Boston-based Pinnacle Advisory Group; the political process by which the 5 percent hotel room tax was passed by county commissioners in September 1999; and evidence fueling “conspiracy theories” that the convention center project was inappropriately orchestrated by Lancaster community leaders.

2001

January

The LCCCA mails approximately 20 requests-for-proposals to potential managers of the convention center. By March, the board winnows the number to five firms, and by May, 2001, three companies make the ’short list’ as finalists: Spectacor Management Group, Global Spectrum; and Interstate Hotels.

All three firms are based in Pennsylvania, and experienced managing large and small conference and convention centers nationally. Spectacor, headquartered in Philadelphia, has the most experience with convention centers, managing more than 90% of the public convention space in the country, including several of the largest facilities in Pennsylvania. Global Spectrum, also based in Philadelphia, manages the Philadelphia Convention Center, among other large centers. Interstate, a Pittsburgh-based company, has a long partnership with Marriott Hotels, and also manages many large conference centers, and several convention centers across the country.

February

State Sen. Gibson E. Armstrong leads a delegation of city leaders and businessmen to Washington, D.C., Thursday requesting up to $25 million in federal funds to revitalize downtown Lancaster. “If we can bring home $23 million from the state for revitalization of downtown Lancaster in the last two years, there’s no reason why we shouldn’t be able to get something from the federal government,” Armstrong is quoted in Lancaster Newspapers. “We pay federal taxes, I just want our fair share.”

May

The Redevelopmen Authority for the city of Lancaster (RACL) votes unanimously on May 22 to nullify the Stevens/Smith easements held by the Trust. The Intelligencer Journal reports:

“Nullifying the easements on the historic properties is valid, as long as the convention center authority buys the Swan Hotel,” said Thomas Weber, chairman of the redevelopment authority.”

The Authority now could do what it pleased with the properties, and it did.

In May, and again in August, 2001, the Greater Lancaster Hotel and Motel Association (GLHMA), sends a letter to Pickard and the LCCCA board urging a separate manager for the convention center, distinct from the still-unnamed hotel operator.

“The bottom line is that we opposed a common manager, period,” says Rodney Gleiberman, General Manager of the Continental Inn and GLHMA member, today. “We were not opposing this common manager, or that common manager. We opposed all common managers based upon the inherent conflict-of-interest, and what we knew would be another item to tip the scales in favor of the hotel competing against us on an uneven playing field.”

July

On July 24, 2001, Penn Square Partners, announces that Marriott has been selected as the hotel ‘flag’ under which its hotel will be built, and that Interstate will manage the hotel.

The next day, July 25, Nevin Cooley, High Industries executive and Penn Square Partners President, urges the LCCCA board to select Interstate as joint manager of both the “private” hotel and “public” convention center.

This is when the battle explodes. The fight is staged on the front pages of Lancaster Newspapers, which finds itself with a hot news story in the usually slow ‘dog days’ of August.

August

On August 15, the Tourism Task Force comes back with its recommendation regarding the single manager question. By a vote of 7-2, the Task Force recommends that Spectacor manage the convention center. The two Task Force members to dissent and vote for Interstate are Jack Howell, director of the Lancaster Alliance, and Deirdre Simmons, a director of the Fulton Theatre, who admitted not to have read or reviewed any of the proposals.

The next day, August 16, a group of prominent hoteliers wrote a letter to Chairman Pickard, among other suggestions, stating: “We experienced SMG’s proposal first hand and found their presentation compelling.  We left the meeting optimistic that SMG’s expertise in operating similar Convention Centers coupled with Interstate’s proven track record in successful hotel management will provide the Penn Square Project the best management team possible.”

On August 17, the Intelligencer Journal published an article, “WILLOW VALLEY WEIGHS IN ON MANAGER BID,” describing how the management of the Willow Valley Resort, which had been in lockstep with the Partners and the Authority until this point, recommended Spectacor and separate management.

In a letter to the Authority board urging a single manager, signed by all three Penn Square Partners – High, Lancaster Newspapers, and Fulton – the Partners write: “Despite the naysayers, Penn Square Partners persisted by investing substantial time, effort and money to promote this vision for a better Lancaster. The opponents chose to litigate and undermine the collaborative efforts proposed by Penn Square Partners and the authority. Their sole goal was to delay, postpone and destroy the project and the corresponding benefits to the community.”

August 22, three top hospitality industry experts, each with decades of experience, speake on behalf of separate management for the public convention center. One of the experts, Robert Butera, president and CEO of Philadelphia’s Pennsylvania Convention Center, questioned whether, in fact, common management was a condition Marriott placed on Penn Square Partners.

September

On September 12 , 2001, the Lancaster County Convention Center Authority holds its scheduled meeting less than 24 hours after the 9/11 terrorist attacks.  Banks, schools, libraries – the entire country is closed; its people in collective shock the day after the attacks. But the convention center authority is open for business the very next morning.

Pickard decides the LCCCA could not delay, by even a single day, the vote on which company would manage a convention center in downtown Lancaster, Pennsylvania.

The chambers at the Southern Market Center were unusually crowded, especially for a morning meeting. Approximately two-thirds of the audience members were in favor of Interstate managing the convention center.

S. Dale High speaks at the meeting, saying: “As we saw with the Twin Towers yesterday, these things can be taken away very quickly.”
2002

January

Lancaster Judge Louis Farina, after having gutted the hoteliers’ case with a number of devastating preliminary rulings the previous summer, decides against the hoteliers on all counts.

The bottom line rulings: the hoteliers did not prove that the “burden” of the room tax outweighed the “benefit” from spillover business the center would generate; the room tax was Constitutional; and the ‘Armstrong Amendment’ of 1999 was not “special legislation,” and would therefore stand.

It was a clear and decisive win for the sponsors, but far from the final battle of this increasingly nasty civic conflict. Within days, the same 11 hotel owners filed an appeal with the Commonwealth Court.

On January 24, in a 6-1 ‘en banc’ (full, seven-judge panel) written ruling, the Commonwealth Court remanded the case back to the Common Pleas Court in Lancaster and back to Farina. The appellate court decision was sharply critical of Farina’s judgment, writing, at one point, “This doesn’t make sense.” The Commonwealth Court essentially told Farina, ‘Get it right this time.’

The LCCCA respondsby hiring renowned and politically well-connected Philadelphia lawyer, Richard A. Sprague, to petition to have the case heard not at the county level, but elevated to the State Supreme Court. Sprague, whose long career includes defending the rich and high profile, including basketball superstar Allen Iverson on gun charges, was and is a “power lawyer” of tremendous clout in the legal community throughout the state. (Sprague later hired retired State Supreme Court chief Justice, Stephen Zapella, to review the Stevens & Lee legal bills. Zapella ruled in Sprague’s favor when the convention center case came before him.)

March

Michael Carper, a former banker and property manager with hotel executive experience, is as the LCCCA’s first professional Executive Director. Carper quits suddenly after just six months on the job. The circumstances of Carper’s departure are sealed in the confidential termination agreement between Carper and the Authority.

April

Pricewaterhouse 2002 “Update Draft,” submitted to LCCCA. Study is later withdrawn by the consulting firm due to changes in size, scope, and cost of project.

In an April 20, 2002 published Letter to the Editor of the Sunday News, Lancaster businessman, Chris Kunzler publicly raises the issue that a government guaranteed bond will be necessary to finance the convention center:

“The convention center alone is expected to cost $55 million, with $15 million supposedly coming from the state. The hotel tax is generating approximately $3 million a year. This $3 million in tax revenue will not come close to servicing the debt on a $40-million bond issue. Let’s not forget the ongoing operating losses of the convention center and the money being spent to promote it. Who will guarantee this bond? And when the project fails, where will the funding come from then? Taxes? Who will be responsible for the losses—the community, with additional taxes?”

May

Attorneys for the Authority – Sprague and Scott Spencer of the Stevens & Lee firm — and those representing the hotel owners – Christopher Conner and Kathy Simpson from Mette, Evans — submit written briefs before the State Supreme Court. The LCCCA submits 50 pages of argument and 92 pages of supporting documents.

September

In an application dated September 13, 2002, James Pickard, then chairman of the Convention Center Authority, had represented the following to the State on an application for a $15 million grant: “Please see the attached Market and Economic Analyses for the Proposed Lancaster County Convention Center prepared by PricewaterhouseCoopers, LLC.  This report represents the results of the market and economic feasibility for the project and includes a recommended building program and utilization estimates as well as a financial and economic impact analysis.” In a signed, official application

December

In a rare joint press conference, on December 6, 2002, the top Lancaster county and city officials, along with Chairman Pickard, express their collective outrage at the hoteliers, and their intention to counter sue them under the Dragonetti Act, which addresses the issue of filing frivolous lawsuits.

2003
May

Republicans Dick Shellenberger and incumbent commisssioner Pete Shaub, and Democrats Molly Henderson and Bill Saylor win their parties respective primary elections. Shellenberger and Shaub are virtually assured of election in November due to the heavy Republican majority in the county. The Democrats traditionally have a two person race for the remaining seat on the board of county commissioners.

June

Attorney Jim Clymer files to runs for County Commissioner. Clymer, the national chairman of the Constitution Party, runs on a platform of shrinking government. He is also strongly opposed to the convention center project.

Clymer is a low-key, but skilled campaigner and attracts significant media coverage. The Sunday News runs a front page article with the headline, “Clymer Calls Election Tune: Constitution Party candidate defines issues in commissioners’ race; now both major parties fear he stands a chance.”

Clymer forces all of the candidates to take a position of the expected vote for a county bond guaranty. The convention center is the major issue of campaign.

July

David M. Hixson is hired as Executive Director of the LCCCA. Hixson is recommended by Jim Pickard. He is to oversee the authority’s day-to-day activities and manage all phases of the project – contracts, construction, personnel, bill paying – from the Authority’s position.

The round-faced, bespectacled, 37 year-old Hixson isn’t a particularly articulate or dynamic speaker. Hixson has no experience in either the hospitality or convention center industries. Most of his former positions were as a press spokesperson. He had a supervisory position with the department of labor and industry in the Ridge administration before coming to the authority.

July/August

Shaub and Shellenberger begin to meet with Lancaster County solicitor, John Espenshade, a Stevens & Lee partner, to discuss selling the county-owned Conestoga View nursing home. Because Shellenberger is not yet elected, the meetings are not Sunshine law violations.

October

On October 16, 2003— without a request from the LCCCA— County Commissioner Chairman Paul Thibault and the board votes to hire bond counsel to explore a county guaranty.

Six days later on the 22nd of October, the commissioners hold a public meeting to discuss the bond guaranty.

On October 29 the $40 million county guaranty is passed (2-1, Shaub votes no) in the form of County Ordinance 73,

November

Shellenberger, Shaub, Henderson are elected county commissioners on November 6.

December

The C.H. Johnson study is released. The study is another market study commissioned by the sponsors.

2004

January

County Commisssioners Shellenberger, Shaub, and Henderson take office on January 8.

On January 12, the 63 year-old Ted Darcus, a former high school basketball star, is voted by his fellow board members chairman of the Convention Center Authority board.

Darcus seems to take meeting management tips from his predecessor on the board, Jim Pickard, who ran the LCCCA meetings with an authoritarian, imperious iron gavel. As with Pickard, under Darcus questions from the public – during public meetings – go unanswered. Darcus, the executive director of the Boys & Girls Club of Lancaster, could be a rude and belligerent chairman. He has a habit of intentionally looking down at his desk when a member of the public was speaking, often pretending to read or write while citizens tries to make their points. Questions from board members are openly discouraged.

March

Gary Heinke is hired as Chief Services Officer for the county, and he begins work on March 29, 2004. Weeks later, his job responsibility are expanded to include supervising five new departments, and overseeing Conestoga View

July

The amendment commonly known as ‘Act 23.’ is passed in the PA legislature. The principal author of the Act 23 amendment [12 Pa.C.S. §3406(b)(11)] is Sen. David Brightbill, a Lancaster County Republican.  Brightbill’s amendment adds language allowing “convention centers” and “hotel establishments” to fall within the Infrastructure and Facilities Improvement Program (IFIP) funding guidelines. (Brightbill goes on to work for the Stevens & Lee law firm, counsel for the Convention Center Authority, after leaving the legislature in 2007. Sen. Gibson Armstrong was also a co-sponsor of Act 23.)

The IFIP was orginally intended as a state financial assistance program in which the Pennsylvania Department of Community and Economic Development (“DCED”) provides multi-year grants to eligible applicants. Grant recipients through this program sell bonds to finance qualifying “infrastructure and facilities” expenses, and then uses grant funds from DCED to pay debt service on the IFIP bonds.

December

December 17, 2004, the Intelligencer Journal publishes an article (“City to buy Watt & Shand”) outlining a plan by which the city of Lancaster, via RACL, would purchase the landmark building from Penn Square Partners.

The article, by Dave Pidgeon, describes an agreement whereby the RACL would buy the building from Penn Square Partners, then lease it back to the Partners, who would then have an option to re-purchase the building in 20 years. No purchase price for the building was mentioned in the December article.

Unlike the Tax Increment Financing (TIF) proposal the sponsors were pitching to the School District of Lancaster, the RACL plan would totally exempt the hotel from property taxes. With city ownership of the building, RACL could now apply for state loans or bonds on two issues of $24 million and $12 million, totaling $36 million. The bonds for the $12 million issue would be funneled through the Department of Community and Economic Development under the IFIP, and Act 23 amendment.

The plan would also allow the City of Lancaster, through RACL, to apply for an annual grant through the state’s Department of Community and Economic Development (DCED), which rebates to PSP an anticipated million dollars of annual state sales tax generated directly or indirectly by the convention center project.  (Eventually the rebate was pledged to service a $14 million loan from Fulton Bank.)

2005

January

With the support of Democrat Henderson, Shellenberger takes over as chairman of commissioners board. This move estranges Shellenberger and Shaub, growing increasingly bitter as the year goes on.

January/February

The private sponsors lobby school board members to adopt their TIF issue proposal. In a letter to the president of the school district, Patrice Dixson, Penn Square Partners President Nevin D. Cooley bases his argument on a market study, which he incorrectly, and repeatedly, characterizes as a “feasibility” study. It was later certified that the study was, in fact, a market study, not the much more comprehensive ‘feasibility’ study which projects revenues and expenses, profits or losses.

March

Commissioners Shellenberger and Henderson send “57 Questions” to PSP, RACL, and the LCCCA. Penn Square Partners and RACL answer none of the questions. The LCCCA answers fewer than half.

Intelligencer Journal publishes March 12 poll, three days before the School Board TIF vote, the results show 93% of respondents oppose the plan.

On March 15, at McCaskey High School, in a 7-1 vote (one abstention), the School Board of Lancaster refuses to back the private sponsors’ TIF proposal.

After the vote, the sponsors and the newspapers suggest the TIF defeat is fatal to the project. “Supporters of a downtown Lancaster hotel and convention center on Thursday pulled the plug on a tax relief plan they said was needed to support the project. And the center project remains barely alive today,” read a New Era article days after the vote.

The fight over the TIF activates two citizens, Randolph Carney, and April Koppenhaver. Both would often attend the public meetings. Carney also carefully monitored the many complicated financial documents and agreements that were generated from the project. He posts many of the documents on a website he runs, LancasterFirst.org. [writer's note: Carney's collection of documents and his analysis have been used in the convention center series.]

April

April 12 City council votes to apply for $36 million in Act 23 funding.

April 20 Lancaster City Controller R.B. Campbell is presented with documents related to the financing of the Act 23 grants.

April 22 Controller Campbell sends letter to Mayor Smithgall stating that he would not execute the documents in question until he had received comfort in the form of an independent review by counsel of the Controller’s choosing to investigate the issues raised by the county solicitor’s memorandum.

April 22 the Mayor sues the Controller to compel him to sign the documents.

April 25 the Controller is ordered to appear in common pleas court, judge enters a preliminary “Mandamus” order requiring the Controller to execute the documents and, in the alternative, allowing the Mayor to sign as attorney-in-fact.

April 27 The April 25 court order made permanent

In early May, Campbell files appeal with Pennsylvania Commonwealth Court. The County files an amicus brief on behalf of Campbell. Campbell loses appeal on September 14, 2005.

Writing that “the project today is very different today than what we studied,” the lead Pricewaterhouse consultant withdraws the firm’s name from study it performed.

Local businessman and philanthropist, Robert E. Field, becomes interested in the project. Field is concerned that the popular support for the project depicted in the media was not a true reflections of the general sentiment of the county. As an experienced hotelier (though with none in the area), he had explored buying the Brunswick, and was not persuaded the market could support the hotel.

Field personally meets with Rufus Fulton, CEO of Fulton Bank, to discuss the project. Fulton referred Field to Jack Buckwalter, Chairman of Lancaster Newspapers, who in turn suggested that Field meet with developer S. Dale High, who was the general partner in Penn Square Partners. The meetings leave Field dubious of the project’s viability.

July

At a regular commissioners’ meeting on July 6, the county commissioners’ vote unanimously to enter into an agreement to sell Conestoga View. The decision to sell the facility ignites a summer-long firestorm of criticism on the pages of all three Lancaster newspapers.

September

On September 1, 2005, the three county-appointed board members are: Judy Ware, John Fry, and Garth Sprecher. Ware, a former art teacher and, with husband Paul Ware, a philanthropist whose four-year term was coming to an end on September 15, 2005. During her time on the board, Ware is regarded as an enthusiastic supporter of the project. Although Ware and the sponsors of the project want her to be re-appointed to the authority board, Shellenberger and Henderson replace her when her term expires.

Ware’s replacement on the LCCCA board is Laura Clampitt Douglas, a tough, smart, sophisticated businesswoman who doesn’t suffer fools. At Douglas’ first LCCCA board meeting, she peppers the chairman, Ted Darcus, and executive director, Dave Hixson, with questions and comments on bills the board was paying.

John Fry, president of Franklin & Marshall College, a private, liberal arts college located in the northwest section of Lancaster city, was appointed to replace Jim Pickard on the LCCCA board in 2003. Pickard’s second term had begun only a month earlier.

With two documents – the minutes of a commissioners’ meeting and a letter confirming the minutes – Chairman Shellenberger brings county treasurer and fellow Republican Craig Ebersole to meet with Fry and show him the letter and minutes indicating his term was expiring. The next day Fry submits his resignation to the county commissioners.

“I don’t believe in serving on boards where I am not wanted,” Fry wrote in a letter to Shellenberger. “For reasons that are not clear to me, you have requested that I immediately submit my resignation as a member of the Authority.”

Shellenberger and Henderson appoint Deb Hall, president of the Ephrata Chamber of Commerce, to the LCCCA board. Like Douglas, Hall is intelligent and tough-minded. If anything, she has a harder edge than Douglas, and she, too, questions about the project.

Six days before the final vote to close the Conestoga View sale, on September 22, 2005, Senator Gib Armstrong and Lancaster Mayor Charlie Smithgall publicly call for Commissioner Shellenberger’s resignation.

“The guy is out of control,” Armstrong was quoted on the front page of the Lancaster New Era. Armstrong, citing Shellenberger’s alleged pressuring of John Fry to resign from the LCCCA board and the handling of Conestoga View as the reason for asking for Shellenberger’s resignation.

The sale of Conestoga View was voted on September 28, 2005. Commissioners Shellenberger and Henderson vote to sell the facility; Shaub dissents. The coverage of the sale continues to be overwhelming critical of “the commissioners.”

October

LCCCA board member, businessman, Garth Sprecher, one of only two original board members still serving on the LCCCA board announces he is resigning from the board on October 15. “Don’t read anything into this,” Sprecher says at his last LCCCA meeting. “I’m just tired.”

Sprecher’s seat is temporarily filled by Timothy Lease, a general manager of a large Mountville motel. Lease resigns suddenly after less than a week due to personal issues. He is replaced weeks later by another Shellenberger and Henderson pick, Jack Craver. Craver is a former hotel executive with decades of experience in the hospitality industry, including management of the world renowned Plaza Hotel in New York City.

Heinke, Shellenberger’s friend hired as Chief Services Officer for the county in 2004, was first mentioned as a target of investigation on October 24.  In a New Era article, “Who is Gary Heinke?” questions are raised by Art Morris about Heinke’s background and credentials listed on his resume.

On that same day, October 24, the commissioners announced they are ordering an investigation into Heinke’s hiring. The head of the county’s human resources department, Thomas Myers, is to lead the investigation.

The next day, October 25, Heinke tells the commissioners the information on his resume is accurate.

Later that day, the 25^th, an article published by the New Era (“A question of credentials”) uncovered several glaring misrepresentations on Heinke’s resume. It is also revealed that Gary Heinke not only received advice from Shellenberger, Shaub, and solicitor John Espenshade prior to his hiring, but he also substantially lied about his work experience and educational credentials.

On October 28, Gary Heinke resigns as Chief Services Officer.

November

November 6. Democrat Rick Gray defeats Smithgall to become Lancaster’s new mayor.

On November 10, the day the Myers Report is to be released, Lancaster County District Attorney, Donald Totaro, announces his office is beginning a grand jury investigation. Totaro, who hasn’t read the Myers-Hoffman Report at the announcement, and blankets the fifth floor with more than 80 subpoenas, including all three Lancaster County Commissioners.

Fox 43 -TV in York, along with Opinion Dynamics, sponsor a public opinion survey regarding the convention center project. The study is underwritten by Robert Field. The questions are developed by Fox 43 and Opinion Dynamics, which perform surveys for the Fox network among many other national clients.  The startling revelation is that 78% of those with an opinion disapproved of the county guaranteeing any portion of the convention center bond issue.

Field, very dissatisfied with how the newspapers report the principal findings of the survey, pays several thousand dollars for a half-page advertisement in the morning and afternoon newspapers for the publication of the entire report, word for word.

December

Robert Field commissions real estate consultant Mark A. Kenney, M.A.I., to certify whether the studies performed on the project were, as had been represented, “feasibility” studies.

Kenny’s report concludes his report dated December 22, 2005:

“In conclusion, my review of the five reports discussed above indicates that they are meant to be market or marketing studies, and neither are represented as feasibility studies nor include sufficient information or analysis to be considered feasibility studies.”

Robert Field launches the website, NewsLanc.com.

2006

January

Lancaster County Convention Center Authority (LCCCA) board members Laura Douglas, Deb Hall, Jack Craver hold public meeting at Farm & Home Center on January 4. Meeting is attended by mostly project opponents. Mayor Rick Gray, who took office only the day before, appears at the meeting and denounces opponents and supports the project. The meeting, and Gray’s remarks, are well-covered in the local print media.

Also on January 4, County Commissioner Molly Henderson sends letter to LCCCA and Mayor-elect Gray making four proposals regarding project:

Gray appears at the January 11 county commissioners meeting and tells commissioners if they want a feasibility study they should pay for it themselves. Commissioners consider offer but do not act immediately. Gray soon backs away from call for study, and adds conditions for its performance. He also attacks Commissioner Shellenberger for his own conditions to the study. Exactly one week after he publicly denounced opponents of the project and spoke in favor of it, newly elected Lancaster City Mayor Rick Gray crashed the county commissioners meeting.

In a joint letter to Shellenberger and Gray dated January 11 (copying all three Lancaster newspapers) Robert Field offers $50,000 to subsidize a feasibility study on the project. saying he would subsidize the cost of the feasibility study in the amount of $50,000. Field writes: “I applaud Mayor Gray’s suggestion that the Commissioners order and pay for a feasibility study and his commitment that, if the project is not feasible, to end his support for the $137 million downtown revitalization initiative. …. Should funding be an obstacle, I am prepared to contribute $50,000 toward the cost of a comprehensive feasibility study of the convention center and hotel, …”

At their January 18 meeting, the County Commissioners vote 3-0 to contact Pricewaterhouse about performing complete feasibility on project. Ten days later, on January 28, Pricewaterhouse declines to conduct the feasibility study. No public explanation is given.

On January 31, the final sale is completed for RACL ownership of Watt & Shand from Penn Square Partners.  The city agency pays $7.25 million.  The original purchase price in 1998 was $1.25 million. Story is not reported until February 9 by Lancaster Newspapers.

Also on January 31, the Historic Preservation Trust gives approval to develop historic Thaddeus Stevens interactive museum on site of Stevens’ former home and office.

February

NewsLanc discovers and reports on February 2 that the project hasn’t gotten necessary “Highway Occupancy Permit” from the PA Dept. of Transportation (PennDOT). The private partners petitioned for a waiver for Traffic Impact Study, but PennDOT rejected the partners waiver request.

At their February 8 meeting, the County Commissioners Shellenberger and Henderson vote to solicit “Requests for Proposals” to perform first comprehensive feasibility study on project. Shaub dissents.

On February 15, the Lancaster County Commissioners vote to hire Pannell, Kerr, Forster (PKF) Consulting to perform feasibility study. PKF is preeminent in hospitality consulting. The cost of the study is projected to be $115,000. Robert Field ups his contribution to $65,000.

February 22. Lancaster County Commissioners file lawsuit challenging ACT 23 funding of project.

February 22. Former county commissioner Paul Thibault criticizes selection of PKF, saying the consulting firm is biased because it served as expert witness in hotelier litigation.

February 22. LCCCA board member Jack Craver writes letter to editor calling for full comprehensive feasibility study.

February 23. LCCCA chairman Ted Darcus wants “gag” order imposed after Craver’s letter is published. “We can’t have people doing their own thing,” says Darcus.

February 23. LCCCA executive director Dave Hixson announces his board will not cooperate in any way with PKF study. Penn Square Partners president Nevin Cooley says the same, as does the city agency, RACL, that purchased the Watt & Shand building.

February 24. LCCCA purchases laundry property on East King Street, adjacent to the project site.

February 25. County commissioner Pete Shaub publicly criticizes selection of PKF to perform feasibility study.

February 28. County challenge to ACT 23 funding is heard in Commonwealth Court. County is represented by special counsel, Howard Kelin.

March

March 1 County commissioner chairman Dick Shellenberger rejects offer from LCCCA chairman Ted Darcus that offered the LCCCA taking county debt if commissioners would drop lawsuit and kill feasibility study. Shellenberger declines, saying, “I am not interested in horse trading.”

March 4 Asbestos and hazardous debris is removed from Watt & Shand building in preparation for demolition.

March 5 Robert Field has Sunday News opinion item published: “Why subsidize a feasibility study?” Field writes: “Having determined that we were on the cusp of spending $140 million (most of it financed by the public) on a project that had not been subject to a professional economic feasibility evaluation I believed it imperative that a genuine feasibility study be undertaken.”

March 13 Penn Square Partners releases self-perfomed “study” showing ‘worst case’ scenario impact on city and county taxpayers. The study says that if county overnight stays declined by an unthinkable 29%, and no one used either the hotel or convention center, that the taxpayer cost would be, at most, $24.39 per city taxpayer, and $2.46 for county taxpayers. The “study” is given prominent placement on the front page of the Local News section.

March 20 LCCCA seeks 19 construction contracts for project. Board members Douglas, Hall, Craver protest receiving documents related to bid process only days before the vote. “It’s more of ‘we’ll ram this through, regardless,’” said Deb Hall.

March 21 State Senate passes amendment to Act 23 legislation by gutting another bill and inserting the Act 23 reforms, which directly benefit project and renders Commissioners lawsuit moot. The move is orchestrated and moved through the Senate by then Senate Appropriations chairman, Gib Armstrong. This is the second time Armstrong has ’strong-armed’ legislation directly benefitting the project. The bill goes to the House and is met with sharp criticism by the entire Lancaster County Republican delegation, who complain about the secretive “heavy-handed tactics” of Armstrong.

April

April 6 Armstrong’s bill is withdrawn from a House vote due to heavy protest from Lancaster

April 13 LCCCA board tables motion introduced by Laura Douglas to cap spending on project. There are no effective restraints on the cost of $140 million project.

April 25 Redevelopment Authority for the city of Lancaster (RACL) announces floating an additional $2 million bond, making city exposure $14 million.

April 26 State House passes Armstrong’s amendment, 146 to 41. All Lancaster County Republicans vote against the bill that directly benefits project and renders county lawsuit moot.

May

May5 The PKF “Executive Summary” is released. Among its conclusions are that the project will lose $1.3 million per year and that project sponsors should consider “downsizing” or “find an alternate use for the site.” The report is immediately excoriated by project supporters.

May5 It is reported in Lancaster Newspapers that the preliminary demolition of Oblender’s building was conducted without a city demolition permit. Demolition is temporarily halted. This is a rare public embarrassment for project sponsors.

May7 LCCCA announces that the construction bids will be opened in two phases: smaller contracts May 9; the rest May 17. The reason for the delay is that contractors are said to need more time to study project.

May9 First construction bids unsealed by LCCCA. Thirteen bids are received for four contracts: pre-cast concrete, laundry service, food service, fire protection.

May10 County Commissioners Henderson and Shellenberger vote to petition the state Department of Community and Economic Development to review the county’s 2003 $40 million bond guaranty. Commissioner Pete Shaub votes against the motion, and publicly charges his fellow commissioners with violating the Sunshine Law: “Commissioner Henderson and Commissioner Shellenberger, you continually violate the Sunshine law.”

May12 Pa. Governor Edward Rendell signs Act 23 bill, as amended by Sen. Armstrong. This codifies the RACL/PSP tax issue on the hotel tax issue. Penn Square Partners will not pay property taxes although it will be the “primary user” of the hotel. It is a major victory for project sponsors.

May17 LCCCA opens remaining construction bids. The low bids immediately put the project $13.6 million over budget, from $89 million to $102.6 million.

May24 The Intelligencer Journal reports that the LCCCA bids actually put the project $25.4 million over budget. Sponsors are urged by commissioners Shellenberger and Henderson to abandon the project; sponsors vow not to “throw in the towel.”

May24 At its regular public meeting, Commissioners Shellenberger and Henderson vote to revoke the $40 million county bond if the LCCCA re-markets bonds to get tax exempt variable or fixed rates. The motion, introduced by Henderson, and is made despite objections from county solicitor Howard Kelin, directs that the county guaranty is revoked if there is a change in the tax status of the bond. The resolution, like many introduced by Henderson, was clearly drafted by a sophisticated legal mind. Her husband, Alex, an experienced attorney is thought to be the drafter of these motions.

May24 At the same meeting as the Henderson resolution, Shellenberger and Henderson refer to a “Plan B” alternate use for the site. Marilyn Berger, a high end real estate broker; Lehr Jackson, an eminent developer; and William Roberts, a re-storer of historic properties were negotiating to purchase the former Watt & Shand property to convert to condos and shops. The Berger-Jackson-Roberts alliance is not disclosed at this point.

May31 At a special commissioners’ meeting in East Donegal Township, Commissioner Henderson publicly questions whether the geographic area from which the hotel and motel room rental tax was drawn is legal. “[I]t is time for the county commissioners to reconsider whether or not the entire county is the appropriate area for the bed tax,” she said at the meeting.

June

June1 Demolition resumes after sponsors acquire permit. Large portions of the home and business of Thaddeus Stevens are razed. The budget gap is still not filled.

June 8 LCCCA board member, Deb Hall, introduces a motion to have a “legal audit” of legal fees paid by the Authority. The motion does not pass.

June 8 High Construction Company resigns as “Construction Manager” of the project in order to bid for the lucrative “General Trades” contract. As Construction Manager, High Real Estate was involved in setting bidding criteria, giving the company a distinct competitive advantage when it bid for the contract.

June 13 LCCCA board votes 4-3 to sue Lancaster County Commissioners Shellenberger and Henderson. They are joined in the suit by Penn Square Partners and RACL. An affidavit submitted by the LCCCA financial advisor said the two commissioners were creating “immediate, imminent, and irrevocable” harm to the project.

July

July 12. Madenspacher hearings begin. The LCCCA, city, and Penn Square Partners, have sued county commissioners Shellenberger and Henderson, arguing they are threatening the project with attempts to revoke bond guaranty.

July 12 Horst Hotels, LLC and Ephrata Motels Partners sue RACL, LCCCA, and Penn Square Partners, arguing the room tax is unconstitutional.

July 17. Madenspacher hearings end.

July 25. Madenspacher issues temporary injunctions against Commissioners Shellenberger and Henderson, enjoing them from tampering in any way with the county guaranty or county financing of the project.

July 27. The last of the construction bids is opened, with High Construction – another subsidiary of the majority partner in PSP – the only bidder. Combined with bids opened previously, the project at least $20 million over budget. Penn Square Partners immediately declares: “It is unlikely that we can organize any combination of resources and strategies that will allow us to move forward with the project as currently designed.” Another headline: “Bids doom center plans: Penn Square Partners says $20 million ‘gap too great.’” The project is practically pronounced dead.

August

August 4. The county’s lawsuit challenging the Act 23 funding is defeated in Commonwealth Court, which holds Act 23 does not violate the uniformity clause of the state constitution.

October

October 13. Four-foot high Watt & Shand letters are removed from the building.

October 24. Madenspacher issue permanent injunction against Commissioners Shellenberger and Henderson, preventing them from revoking the county’s guaranty of the project.

October 31 Shellenberger and Henderson again vote to appeal a legal defeat. They vote to appeal the Madenspacher decision in Commonwealth Court.

November

November 8. Lancaster County commissioners Shellenberger and Henderson write a letter to M&T Bank demanding that project developers have construction financing in place before floating the construction bond. County special counsel, Howard Kelin, gives the bank a November 15 deadline.

November 16. The LCCCA financial advisor, Thomas Beckett, announces at its meeting that the cost of the project has grown $10.1 million, bringing the total now to $165.5 million, according to Lancaster newspapers.

November 22. The State Supreme Court rejects county appeal without hearing the case. They also decline to hear a companion suit filed by city resident April Koppenhaver, who is suing regarding the city Act 23 financing.

December

December 13. At a LCCCA finance committee meeting, financial adviser Beckett again announces the project will cost an additional $5 million, bringing the total now to $170.5 million.

December 14. After a 13-month grand jury investigation, Commissioners Dick Shellenberger and Pete Shaub plead guilty to two violations of the state’s Sunshine Law related to the sale of Conestoga View. Commissioner Molly Henderson pleads guilty to one Sunshine Law violation. Shellenberger and Shaub are fined $200; Henderson, $100.

December 14. At the regular LCCCA meeting, the board votes 4-3 along city/county lines to increase borrowing limit from $47 million to $64 million. The board also votes to authorize its advisers to negotiate bond interest rates.

December 15. Lancaster president judge Louis J. Farina orders the grand jury report sealed for a minimum of 20 days to allow those criticized in the report time to respond. The date for release is given as January 8, 2006.

December 26. Commissioner Pete Shaub announces he will resign his office, effective February 4, 2007, with eleven months remaining in his term. Shaub says he will return to the construction industry.

###

Forty-third in a series by Christiaan Hart-Nibbrig

Editor’s note:  The following will facilitate understanding parallel developments concerning the Convention Center project over the course of 2006.

January

4 Lancaster County Convention Center Authority (LCCCA) board members Laura Douglas, Deb Hall, Jack Craver hold meeting at Farm & Home Center. Meeting is attended by mostly project opponents. Mayor Rick Gray, who took office only the day before, appears at the meeting and denounces opponents and supports the project. The meeting and Gray’s remarks are well-covered in the local print media.

4 County Commissioner Molly Henderson sends letter to LCCCA and Mayor-elect Gray making four proposals regarding project: One of the proposals is that all work on project cease until a “comprehensive feasibility study is conducted.”

11 Gray appears at county commissioners meeting and tells commissioners if they want a feasibility study they should pay for it themselves. Commissioners consider offer but do not act immediately. Gray soon backs away from call for study, and adds conditions for its performance. He also attacks Commissioner Shellenberger for his own conditions to the study.

11 Robert Field offers $50,000 to subsidize a feasibility study on the project.

18 County Commissioners vote 3-0 to contact Pricewaterhouse about performing complete feasibility on project

18 County Commissioners vote 3-0 to hire respected CPA firm of Reisel, Kunz, Lesher to audit the Conestoga View sale transaction. The report would be released in the early Spring.

28 Pricewaterhouse declines to conduct the feasibility study. No public explanation is given.

31 Sale completed for RACL ownership of Watt & Shand. City buys building from Penn Square Partners for $7.25 million, after paying $1.2 for the property seven years before.

31 Historic Preservation Trust given ok to develop historic Stevens interactive museum on site of Stevens’ former home and office.

February

2 NewsLanc discovers and reports project hasn’t gotten necessary “Highway Occupancy Permit” from the PA Dept. of Transportation (PennDOT). The private partners petitioned for a waiver for Traffic Impact Study, but PennDOT rejected the partners’ waiver request.

8 County Commissioners Shellenberger and Henderson vote to solicit “Requests for Proposals” to perform first comprehensive feasibility study on project. Shaub dissents.

15 Lancaster County Commissioners vote to hire Pannell, Kerr, Forster (PKF) Consulting to perform feasibility study. PKF is preeminent in hospitality consulting. The cost of the study is projected to be $115,000. Robert Field ups his contribution to $65,000.

22 Lancaster County Commissioners file lawsuit challenging ACT 23 funding of project.

22 Former county commissioner Paul Thibault criticizes selection of PKF, saying the consulting firm is biased because it served as expert witness in hotelier litigation.

22 LCCCA board member Jack Craver writes published letter to editor calling for full comprehensive feasibility study.

23 LCCCA chairman Ted Darcus wants “gag” order imposed on board members after Craver’s letter is published. “We can’t have people doing their own thing,” says Darcus.

23 LCCCA executive director Dave Hixson announces his board will not cooperate in any way with PKF study. Penn Square Partners president Nevin Cooley says the same, as does the head of city agency, RACL, that purchased the Watt & Shand building.

24 LCCCA purchases laundry property on East King Street, adjacent to the project site.

25 County commissioner Pete Shaub publicly criticizes selection of PKF to perform feasibility study.

28 County challenge to ACT 23 funding is heard in Commonwealth Court. County is represented by special counsel, Howard Kelin.

March

1 County commissioner chairman Dick Shellenberger rejects offer from LCCCA chairman Ted Darcus that proposed the LCCCA taking county bond risk if commissioners would drop lawsuit and kill feasibility study. Shellenberger declines, saying, “I am not interested in horse trading,” he says.

4 Asbestos and hazardous debris is removed from Watt & Shand building in preparation for demolition.

5 Robert Field has Sunday News opinion item published: “Why subsidize a feasibility study?” Field writes: “Having determined that we were on the cusp of spending $140 million (most of it financed by the public) on a project that had not been subject to a professional economic feasibility evaluation I believed it imperative that a genuine feasibility study be undertaken.”

13 Penn Square Partners releases self-perfomed “study” showing ‘worst case’ scenario impact on city and county taxpayers. The study says that if county overnight stays declined by an unthinkable 29%, and no one used either the hotel or convention center, that the taxpayer cost would be, at most, $24.39 per city taxpayer, and $2.46 for county taxpayers. The “study” is given prominent placement on the front page of the Local News section.

20 LCCCA seeks 19 construction contracts for project. Board members Douglas, Hall, Craver protest receiving documents related to bid process only days before the vote. “It’s more of ‘we’ll ram this through, regardless,’” said Deb Hall.

21 State Senate passes amendment to Act 23 legislation by gutting another bill and inserting the Act 23 reforms. The changes directly benefit project and renders Commissioners lawsuit moot. The move is orchestrated and moved through the Senate by then Appropriations chairman, Sen. Gibson Armstrong. This is the second time Armstrong has ’strong-armed’ legislation directly benefiting the project. The bill goes to the House and is met with sharp criticism by the entire Lancaster County Republican delegation who complain about the secretive “heavy-handed tactics” of Armstrong.

April

6 Armstrong’s bill is withdrawn from a House vote due to heavy protest from Lancaster

13 LCCCA board tables motion introduced by Laura Douglas to cap spending on project. There are no effective restraints on the cost of $140 million project.

18 RACL’s “Convention Center Task Force” awards contracts for demolition of Watt & Shand building.

25 Redevelopment Authority for the city of Lancaster (RACL) announces floating an additional $2 million bond, making city exposure $14 million.

26 State House passes Armstrong’s amendment, 146 to 41. All Lancaster County Republicans vote against the bill that directly benefits project and renders county lawsuit moot.

May

5 The PKF “Executive Summary” is released. Among its conclusions are that the project will lose $1.3 million per year and that project sponsors should consider “downsizing” or “find an alternate use for the site.” The report is immediately excoriated by project supporters.

5 It is reported in Lancaster Newspapers that the preliminary demolition of Oblender’s building was conducted without a city demolition permit. Demolition is temporarily halted. This is a rare public embarrassment for project sponsors.

7 LCCCA announces that the construction bids will be opened in two phases: smaller contracts May 9; the rest May 17. The reason for the delay is that contractors are said to need more time to study project.

9 First construction bids unsealed by LCCCA. Thirteen bids are received for four contracts: pre-cast concrete, laundry service, food service, fire protection.

10 County Commissioners Henderson and Shellenberger vote to petition the state Department of Community and Economic Development to review the county’s 2003 $40 million bond guaranty. Commissioner Pete Shaub votes against the motion, and publicly charges his fellow commissioners with violating the Sunshine Law: “Commissioner Henderson and Commissioner Shellenberger, you continually violate the Sunshine law.”

12 Pa. Governor Edward Rendell signs Act 23 bill, as amended by Sen. Armstrong. This codifies the RACL/PSP tax issue on the hotel tax issue. Penn Square Partners will not pay property taxes although it will be the “primary user” of the hotel. It is a major victory for project sponsors.

17 LCCCA opens remaining construction bids. The low bids immediately put the project $13.6 million over budget, from $89 million to $102.6 million.

24 The Intelligencer Journal reports that the LCCCA bids actually put the project $25.4 million over budget. Sponsors are urged by commissioners Shellenberger and Henderson to abandon the project; sponsors vow not to “throw in the towel.”

24 At its regular public meeting, Commissioners Shellenberger and Henderson vote to revoke the $40 million county bond if the LCCCA re-markets bonds to get tax exempt variable or fixed rates. The motion, introduced by Henderson, and is made despite objections from county solicitor Howard Kelin, directs that the county guaranty is revoked if there is a change in the tax status of the bond. The resolution, like many introduced by Henderson, was clearly drafted by a sophisticated legal mind. Her husband, Alex, is thought to be the drafter of these motions.

24 At the same meeting as the Henderson resolution, Shellenberger and Henderson refer to a “Plan B” alternate use for the site. Marilyn Berger, a high end real estate broker; Lehr Jackson, an eminent developer; and William Roberts, a restorer of historic properties were negotiating to purchase the former Watt & Shand property to convert to condos and shops. The Berger-Jackson-Roberts alliance is not disclosed at this point.

31 At a special commissioners’ meeting in East Donegal Township, Commissioner Henderson publicly questions whether the geographic area from which the hotel and motel room rental tax was drawn is legal. “[I]t is time for the county commissioners to reconsider whether or not the entire county is the appropriate area for the bed tax,” she said at the meeting.

June

1 Demolition resumes after sponsors acquire permit. Large portions of the home and business of Thaddeus Stevens are razed. The budget gap is still not filled.

8 LCCCA board member, Deb Hall, introduces a motion to have a “legal audit” of legal fees paid by the Authority. The motion does not pass.

8 High Construction Company resigns as Construction Manager of the project in order to bid for the lucrative “General Trades” contract. As Construction Manager, High Real Estate was involved in setting bidding criteria, giving the company a distinct competitive advantage when it bid for the contract.

11 Developers Lehr Jackson, William Roberts, and Real Estate broker Marilyn Berger are revealed to be working on a ‘Plan B’ use for the former Watt & Shand building and the surrounding properties.

13 LCCCA board votes 4-3 to sue Lancaster County Commissioners Shellenberger and Henderson. They are joined in the suit by Penn Square Partners and RACL. An affidavit submitted by the LCCCA financial advisor said the two commissioners were creating “immediate, imminent, and irrevocable” harm to the project.

15 Due to pressure from historic preservationists and project critics, a two-week delay in the demolition of the Thaddeus Stevens property is announced jointly by the LCCCA and Historic Preservation Trust.

18 Sunday News begins “countdown” until the end of the terms of Shellenberger and Henderson. There are 564 days remaining in the terms of the commissioners. Also, the Sunday News editorial agrees with Robert Field, the LCCCA board members Douglas, Hall, and Craver in calling for the release of the Stevens & Lee legal invoices. “Convention Center Authority only gives naysayers ammunition when it withholds information on attorneys bills.”

22 County Commissioners Shellenberger and Henderson hold evening public meeting at the Ephrata Public Library. Dozens of citizens speak, the majority against the convention center project. The meeting was called by the commissioners to hold a public discussion on the possibility of shrinking the geographic area of the hotel room rental tax.

27 Through interim county solicitor, Howard Kelin, the county begins challenge of 2003 guaranty, signed by then commissioner chairman Paul Thibault. Kelin argues that the language of the bond guaranty and the Trust Indenture drafted by another Stevens & Lee attorney on behalf of the LCCCA is in conflict.

27 Commissioners Shellenberger and Henderson hire Philadelphia-based firm of Dillworth Paxson to represent them in the lawsuit brought against them by the LCCCA.

27 Lancaster City Council votes unanimously to pass resolution supporting a countywide collection of the hotel room tax. This is a symbolic gesture in support of the project.

28 Commissioners Shellenberger and Henderson vote to officially notify the LCCCA that unless construction begins by August first, they will consider that a violation of the terms of the bond agreement and therefore revoke it.

30 Audit reveals LCCCA has $258,000 deficit.

Forty-second in a series by Christiaan Hart-Nibbrig

“We – I – made a mistake. We should have been looking at the contracts. We took the bait.”

– Robert E. Field, reflecting on the decision to pressure the Lancaster County Convention Center Authority to release legal invoices, instead of examining the multi-million dollar contracts the Authority had entered into with Penn Square Partners.

Opposition to the convention center project was bolstered by the selection of Pannell, Kerr, Forster (PKF) to perform the first feasibility study on the project. After PKF was chosen in mid-February 2006, many critics of the project turned their attention to the charges of the law firm at the center of virtually every aspect of this project: Stevens & Lee.

The Reading-based firm authored (and lobbied for) the 1994 Third Class Convention Center Authority Act, allowing counties to impose a five percent room rental tax on all county hotels and motels in order to build convention centers. This tax generated about three million dollars per year for the Lancaster County Convention Center Authority (LCCCA).

Stevens & Lee is also the registered lobbyist for High Industries, the parent company of High Associates, the general partner of Penn Square Partners.

At the time the LCCCA was established in September, 1999, John Espenshade, a Stevens & Lee partner, was simultaneously the Lancaster County solicitor and the solicitor for the LCCCA. Stevens & Lee occupied the same dual role in Berks, Luzerne, and Erie counties when those counties built controversial publicly financed convention center projects.

Additionally, Stevens & Lee attorneys represented about one-third of the county’s outside “special counsel” work, and received the attorneys’ fees for the sale of Conestoga View. Espenshade himself was involved with the preliminary negotiations between Commissioners Shellenberger and Shaub regarding the nursing home transaction. (The Conestoga View issue proves to be so politically devastating that Commissioner Shaub will quit before his term ends; Shellenberger decides not to run again; and Henderson is trounced in her re-election bid and sues Lancaster Newspapers for libel related to the Conestoga View coverage.)

The Lancaster offices of Stevens & Lee are even located in Fulton Bank, then a limited partner in the convention center project.

It was especially the firm’s role as LCCCA solicitor that drew the attention of project critics.

By 2006, Stevens & Lee had billed (and been paid by) the LCCCA more than six million dollars. Every single one of the more than 200 invoices was devoid of itemized detail with respect to the work performed. Each invoice simply read:

“For professional services rendered on behalf of the Lancaster County Convention Center Authority.”

In December of 2005, Robert Field launched Newslanc.com. This writer worked as its first news editor. On the site, which was updated daily, Field wrote a “Watch Dog” column, in which he would  discuss and often praise or criticize local items published in the Lancaster newspapers, with particular attention given to the convention center issue.

NewsLanc newsletters were handed out at the popular Lancaster Central Market, baseball games, and other county events that attracted large crowds. (Field often joined in handing out the fliers, something he still does today.)

Field, an experienced political activist, also ran lively, often pointed, radio spots for NewsLanc at popular Lancaster stations.

Through the Pennsylvania Right to Know law, NewsLanc obtained the invoices for the Stevens & Lee LCCCA billings. There were 228 invoices ranging in amounts from less than one hundred dollars to more than $100,000.

Field analyzed the numbers and concluded that Stevens & lee would have had to have multiple  personnel working full-time on the project to come up with the amount being charged, which he believe was inconceivable.

To Field, in the early months of 2006, the seemingly cavalier withholding of normal billing procedures was a red flag, and he was determined to get the itemized invoices released. “I took the bait,” he says today.

Joining Field in aggressively questioning the Stevens & Lee invoices were the three new county-appointed members of the LCCCA board of directors.

Laura Douglas, Deb Hall, and Jack Craver – three strong, independent personalities — had already revealed their disenchantment with the project by the time they began asking about the attorneys’ fees. In early January, 2006, only months after being appointed to the board, the three convened a large public meeting to air out questions about the project. More than 200 people attended the meeting.

Now, Douglas, Hall, and Craver were asking about the invoices at board meetings.

“The issue with the Stevens & Lee bills for me was that it seemed like a lot of money was being paid for this work,” says Douglas today. “I wanted a ’spot forensic’ to see if the work we were being charged took that amount of time. But we couldn’t get any answers from Ted.”

‘Ted’ was Ted Darcus, the imperious chairman of the LCCCA board, who consistently and often rudely denied the public and even board members access to itemizations supporting the invoices, saying they contained confidential information and would not be available as long as there was ongoing litigation.

In June of 2006, Deb Hall, whose day job was then president of the Ephrata Chamber of Commerce and who was a former paralegal, introduced a resolution to hire an independent legal auditor to review the Stevens & Lee bills. The proposal was voted down by the majority of the LCCCA board.

It seemed the entire opposition to the project was focused on the Stevens & Lee invoices. Former Lancaster city councilman, Luis Mendoza, wrote (with Field’s assistance) multiple letters to the editor and appeared at LCCCA board meetings demanding the full release of the invoices.

The always entertaining Ron Harper, Jr., in his inimitable fashion, also demanded the bills release. Harper appeared at LCCCA meetings with a large cardboard cutout of Espenshade. Harper would make his remarks with his arm around “Flat John,” as he asked the non-responsive Espenshade about the bills during the public comment portion of the meetings. This never failed to garner laughs, even from Darcus and other project supporters.

Craver, the former general manager of New York’s Plaza Hotel, had written a published letter to the editor to one of the Lancaster Newspapers in which he criticizes the project’s lack of a feasibility study, financing, and the administration of the LCCCA board under Darcus. Craver copied his letter to the Governor and Attorney General.

What Field, the dissident LCCCA board members, and others questioning the Stevens & Lee bills did not know at the time, but subsequently learned, was that the firm had personnel working full-time on the project, and were its de facto developers and managers.

The time and energy the opponents to the convention center project devoted to the Stevens & Lee invoices was misplaced. During this period, the first six months of 2006, important contracts were being drafted, and they were being made without scrutiny.

Several-hundred page of agreements were dropped off with LCCCA board members with only a couple of days for close reading before voting. Both Douglas and Hall routinely had their own 45+ hour work weeks around which they had to schedule LCCCA duties including, on this occasion,  analysis of the complex legal and financial documents.

Key agreements concerning bond financing; architectural design; shared space between the hotel and convention center; naming rights; permit waivers; consultant contracts; demolition of historic property and others were rammed through by Darcus with the votes of the other three city appointees over the pleas for more time to review by the county appointed minority.  Thereafter, the agreements were overlooked as the opposition focused its limited resources on the Stevens & Lee invoices.

Robert Field, with a well-earned reputation for unsparing and often harsh criticism of the foibles of others, is equally blunt with his self appraisal:

“The big mistake was that we did not voice objections at the very next meeting after having thoroughly reviewed the one-sided agreements. Instead we took the Stevens and Lee invoices bait!

“We [the opposition's leading figures] were all working independently and were not even necessarily congenial. There were no gatherings to discuss what we should do, no lawyers or public relations consultants to guide us, no word coming down from the top…

“The Stevens & Lee invoices issue seemed to suggest ongoing corruption as did the almost million dollars paid to Daniel Logan for services that remain obscure. It took until the end of litigation and the obtaining of the data behind the invoices before we recognized that Stephens and Lee with other high priced consultants were actually running the show on a daily basis.  It helped explain whyTed Darcus and David Hixson would not allow discussions at the meetings.  They were but bystanders!”

If the sponsors “out-smarted” Field and other critics, they were richly rewarded for their efforts. The agreements that were passed without close examination put a lot of money into the sponsors’ pockets, money that came mostly from county and state taxpayers.

###

Next installment: Fog of War Part II: Sweet heart deals all around!

Forty-first in a series by Christiaan Hart-Nibbrig

“In conclusion, my review of the five reports discussed above indicates that they are meant to be market or marketing studies, and neither are represented as feasibility studies nor include sufficient information or analysis to be considered feasibility studies.” – Mark A. Kenney, MAI, real estate consultant, December 22, 2005 on the five studies misrepresented by project sponsors as “feasibility studies.”

From the time the hotel and convention center project was introduced, the sponsors of the project consistently referred to the “feasibility” studies that they said supported building it. Beginning with the Ernst & Young “Market Study” of 1999, two studies by PricewaterhouseCoopers, one in 2000 and a 2002 “Update Draft,” a 2003 HVS “Market Study, ” and finally the C.H. Johnson “Memorandum Draft,” the sponsors publicly referred to them as “feasibility” studies by name.

In lobbying for the Tax Increment Financing (TIF) plan in February of 2005, Nevin D. Cooley, President of Penn Square Partners and the High Real Estate Group, wrote to Patrice Dixson, Lancaster School Board president, and four times referred to the “HVS Feasibility Study.”

In a signed, official application for a $15 million state grant for the project, then-chairman and executive director of the Lancaster County Convention Center Authority (LCCCA), James Pickard, referenced the Pricewaterhouse study, which, he wrote, reflected the “economic feasibility” of the project.

The problem with these characterizations was that none of these studies were, in fact, “feasibility” studies, but rather market studies, and the difference between the two types of reports is considered substantial.

The absence of a true feasibility study on the project was uncovered by NewsLanc publisher, Robert E. Field. One day in early December, 2005, Field noticed a stack of reports on his desk. They were all of the reports for the project. “I still have no idea how I acquired those reports,” says Field today.

Field took the documents home and read them all closely. He was stunned.

“I couldn’t believe it,” said Field, who had decades of experience as a real estate developer of hotels and apartment buildings. “These weren’t feasibility studies. I had several feasibility studies done for hotels we built. The convention center studies contained none of the analysis one would find in a feasibility study.”

Field returned to his office and confirmed his impressions by reviewing the feasibility studies he commissioned, and comparing them to the convention center reports.

On December 15, 2005, Field spoke via telephone with Lancaster Newspapers chairman, Jack Buckwalter, and made him aware of his findings and urging him to undertake an actual feasibility study.

Buckwalter’s dismissal of Field’s concerns prompted Field to contact Mark A. Kenney, MAI, a certified real estate appraiser and consultant. Field asked Kenney to review all the convention center reports and make a professional determination certifying what kind of reports they were.

Kenney concluded that all of the reports were not feasibility studies, but the more narrowly focused and less comprehensive marketing studies.

Kenney’s report is dated December 22, 2005:

“In conclusion, my review of the five reports discussed above indicates that they are meant to be market or marketing studies, and neither are represented as feasibility studies nor include sufficient information or analysis to be considered feasibility studies.”

In a recent interview with NewsLanc, Kenney spoke about the two types of studies. “The difference between a market or marketing study and a feasibility study may not be known to the general public and used interchangeably,” Kenney said. “But people in the real estate business surely know the difference between the terms. You use a feasibility study to examine all the financials – taxes, investment, income, expenses, insurance, financing costs, everything – to determine if the project should be built. A market study doesn’t include all of that, and focuses, as the name suggests, on the marketing aspect of the proposed project.”

Field was by then a veteran political activist, who had served as Sen. Arlen Specter’s finance chairman in his first (and successful) Senatorial bid in 1980, and who was by 2005 an established leader in the national and international drug policy and harm reduction reform movements.

Field wrote to out-going mayor Charlie Smithgall, Mayor-elect Rick Gray, LCCCA Chairman Ted Darcus, Rep. Mike Sturla, Sen. Armstrong, the president of the school board, president of city council urging each to support a full feasibility study be performed on the project.

Even Carrie Steinman Nunan, an heir to the Steinman empire, received a letter from Field urging a full feasibility study.

In a December 29, 2005 letter to New Era editor, Ernie Schreiber, Field wrote: “Something very positive you could immediately do is to write an editorial calling for the County, City, and Authority to jointly commission a genuine feasibility study….”

Field went before the county commissioners, as well as the LCCCA board.

“It is sorry commentary on the local monopoly print media that a private citizen should have to … expose the false characterizations of pivotal studies pertaining to the Convention Center and Hotel project,” he said to both boards in prepared remarks.

The issue of having an actual feasibility study done on the project got an unexpected boost on January 11, 2006. Exactly one week after he publicly denounced opponents of the project and spoke in favor of it, newly elected Lancaster City Mayor Rick Gray crashed the county commissioners meeting.

Standing in the back of the room, still wearing his overcoat, the burly, bow-tied Gray told the commissioners, who supported Field’s call for a feasibility study, that if they wanted a feasibility study done they should have Pricewaterhouse update its earlier studies, and the commissioners should pay for the cost of it.

The commissioners did not immediately embrace the Mayor’s proposal. Instead, they thanked the mayor for his proposal and said they would consider it. Gray then turned and left the meeting without ever sitting down.

Within 90 minutes of Gray’s offer, Field received that news from this writer, who was covering the commissioners’ meeting. Field immediately spun around in his chair in his office and wrote a joint letter to Shellenberger and Gray (copying all three Lancaster newspapers) saying he would subsidize the cost of the feasibility study in the amount of $50,000.

“I applaud Mayor Gray’s suggestion that the Commissioners order and pay for a feasibility study and his commitment that, if the project is not feasible, to end his support for the $137 million downtown revitalization initiative. ….

“Should funding be an obstacle, I am prepared to contribute $50,000 toward the cost of a comprehensive feasibility study of the convention center and hotel, …”

Mayor Gray seemed to back away from his position almost immediately. When Commissioner Shellenberger announced on January 14 that another firm should perform the study because of a statement made by one of the Pricewaterhouse consultants distancing the firm from its earlier studies, Gray blasted Shellenberger calling the move “wasteful” and “unnecessary.”

The county commissioners capitulated to Mayor Gray’s insistence that Pricewaterhouse conduct the study. At its January 18, 2006 public meeting, the commissioners voted to authorize special counsel, Howard Kelin, to contact Pricewaterhouse about conducting a full feasibility study for the now $137 million project. One week later, Kelin wrote a letter to the firm about re-engaging it for the new study.

But Gray still objected. In addition to Pricewaterhouse doing the study, and imposing a hard 60-deadline from January, 11, 2006, Gray, in a letter to Shellenberger dated January 20, insisted Pricewaterhouse “evaluate the changed project on the same basis as the earlier project was evaluated.” The last caveat would ensure that a market, not a feasibility, study would be performed.

The debate as to whether Pricewaterhouse should write a full feasibility study on the hotel and convention project was killed when the firm declined to participate in the study on January 28. There was no public explanation given for turning down the work.

On February 9, 2006 – four full weeks after Mayor Gray’s proposal and Field’s $50,000 subsidy offer – the Lancaster County Commissioners still had not commissioned a full feasibility study.

The commissioners Shellenberger and Henderson were receiving other pressures regarding who would conduct the study. The Uptown Economic Development Corporation (UEDC) is an organization comprised primarily of local black business and community leaders. In a letter to Shellenberger dated January 19, 2006, Rev. Roland Forbes, chairman of the UEDC, wrote:

“Recent revelations surrounding the absence of an actual feasibility study have only added to our anxiety. We applaud the efforts of Mayor Gray and you are making to address this glaring due diligence omission. However, total reliance on Price Waterhouse Coopers to review its earlier reports will not instill the project with the public confidence it needs. What is required immediately is an independent peer assessment.”

Forbes continued to recommend that an Orlando-based firm, ZHA, perform the feasibility study because, he wrote, “ZHA … has no vested interest in this deal.”

At the commissioners’ weekly meeting on February 9, at which several members of the city’s Uptown Economic Development Corporation (UEDC) spoke in favor of a full feasibility study, the commissioners voted to send out Requests for Proposals for a full feasibility study.

“Some of us conclude that there has been a rush to judgment,” said UEDC member, Rev. Earl Harris, to the commissioners, invoking the Johnny Cochran phrase, and perhaps sending a coded message with respect to selecting a firm.

What happened next was a strenuous debate between Shellenberger and Henderson, who spoke separately with Field, on who should be selected to perform the study.

The commissioners were, in mid-February 2006, politically damaged by extensive Conestoga View and now grand jury coverage in Lancaster newspapers.  They were now torn between the UEDC recommendation of ZHA, and Field’s opinion that the international hospitality consultancy of Pannell, Kerr, Forster (PKF) should be selected.

“It was vital that a top firm conduct the study,” says Field today. “It had to be a firm whose credentials and reputation could not be questioned. PKF was one of the few who could meet the highest standard.”

The commissioners were eventually persuaded to choose PKF. On February 16, 2006, Commissioners Shellenberger and Henderson voted to hire PKF to perform the feasibility study (Shaub dissented). The cost: $115,000.

Field immediately raised his pledge to $65,000.  “This is something that needs to be done, and which will ultimately bring this community together,” he told the Intelligencer Journal.

In choosing PKF, the county was selecting one of the industry’s top firms in hotel consultancy, with a track record with some of the largest hotels and convention centers in the United States and the world.

PKF consultants sought  the cooperation of the principals. And in late February, 2006, any assistance from the sponsors was not to be assumed.  In fact, efforts were underway to discredit the company by accusing it of bias.

Next:  The fog of war.

Fortieth in a series by Christiaan Hart-Nibbrig

“Wherever this takes us…”

– Lancaster County District Attorney, Donald A. Totaro, in response to a question about the scope of a grand jury investigation he launched, November 10, 2005. The secret inquiry is centered on the hiring of a county administrator charged with falsifying a resume. It is only the third grand jury empanelled in Lancaster County history. The other two were high-profile, sensitive homicide cases.

The legal sale of a county building would seem an unlikely issue to dominate news coverage during a city mayoral election campaign. But the sale of the Conestoga View nursing home was unquestionably the ‘big story’ in the summer and fall of 2005, at least according to the editors at Lancaster Newspapers. Nothing else came close.

Between the time the Lancaster County commissioners voted unanimously to enter into a sales agreement to sell Conestoga View on July 6, 2005, to the final vote to close the sale on September 28, 2005, and well past the election in November, the media coverage, particularly newspaper, of the transaction can only be described as ‘saturated,’ or blanket coverage. And the coverage was overwhelmingly negative as it concerned the county commissioners.

The harshest, most outspoken critic was former Lancaster mayor, Art Morris, who attended every commissioner’s meeting throughout the summer and fall vigorously opposing the sale. Morris, clad in a business suit, tall and well-spoken, peering over his glasses, would stand and speak directly to the commissioners during the public comment portion of the meetings, excoriating them on various aspects of the transaction.

“There is absolutely no justification for the speed with which you are moving forward on this sale,” Morris told the commissioners at an August 24 commissioners’ meeting, six weeks after they announced the pending, not yet complete, sale.

Morris’ comments and opinions found their way increasingly into front page reports in the Lancaster newspapers. His scathing criticisms were reflected, as well, in the editorial and letters-to-the-editor sections.

Sunday News editor Dave Hennigan’s hokey, but popular, “Coffee with Clyde” column also prominently incorporated, sometimes mirrored, Morris’ criticisms of the commissioners. Morris used his own Sunday News column to slam the sale.

County controller (and future county commissioner) Dennis Stuckey made public his office’s analysis of the sale, concluding that Conestoga View was not losing money, as the current board claimed, but rather was operating at a cash flow profit. Stuckey said a five-year review of the facility’s finances revealed the nursing home lost only $362,378 since 1999 when depreciation of the home is factored into the budget. Without depreciation, Stuckey said, Conestoga View was profitable.

“We think there was some faulty logic coming up with the [commissioners'] numbers,” Stuckey told the New Era. “It’s operationally sound at this point.”

Don Elliot, then county administrator, who was central to the sale negotiations, responded by saying Stuckey’s accounting did not reflect that Conestoga View has been tapping a savings account, an “enterprise fund,” in order to balance its budget the past several years.  Without enterprise funding, Elliot said, the facility operated at a loss.

As the September 28 final vote on the sale approached, Morris was joined at commissioners’ meetings by former county commissioner, Paul Thibault (“There are holes in this agreement you could drive a truck through,” said Thibault); and then-Mayor and candidate for mayor, Charlie Smithgall, who raised the emotional issue of indigent care (“This is the last and only place that will take ventilator patients, quads, paraplegics, etc.,” the mayor said delicately).

Also in the audience at each county commissioners’ meeting were Smithgall’s 70-something year-old mother-in-law, Jane Albright; Chamber of Commerce President, Tom Baldridge (“We cannot support the sale as presently structured,” said Baldridge.); and Lancaster Township Supervisor, Tony Allen, (who encouraged Shellenberger to release himself “from the evil clutches of Molly Henderson”) added his voice to the gallery of detractors.

These people had something else in common apart from opposition to the Conestoga View sale – all, including Morris, were strong, day-one, on-the-record supporters of the convention center project.

The unusually extensive newspaper coverage – dozens of articles; tens of thousands of words, above-the-fold banner headlines, editorials, letters, photographs – dedicated to criticizing the commissioners over the Conestoga View sale had a strong, though strange, impact on the convention center debate.

By running so many items on Conestoga View, the public’s attention was largely diverted from the convention center project. This was after the TIF defeat for the sponsors, which galvanized the public opposition against the project. Instead of commissioners Shellenberger and Henderson talking about the then-$137 million project, they were forced to constantly defend an increasingly unpopular, and newspaper-hyped, $8.5 million sale of a county asset.

The Steinman family owned, operated, and controlled a print monopoly in Lancaster County for most of the 20th century. The Steinmans published all three major publications – the morning Intelligencer Journal, the afternoon Lancaster New Era, and the Sunday News, as well as the leading farm journal and the Spanish language weekly. (The Intelligencer Journal and New Era merged in 2008.)

Then, most Lancastrians still relied on one of the two daily broadsheet newspapers for local news coverage. The Sunday News (also a broadsheet) combined the readerships of both dailies and had a circulation around 90,000 in 2005. Both dailies had circulations of roughly half that amount at the time. Lancaster County then had a population of 490,000. That meant that one of the Lancaster Newspapers was delivered to the majority of households every single day of the week in Lancaster County. And there was no print competition for any of the three.

The question of why Lancaster Newspapers’ top editorial leadership decided to devote so much coverage to the legal $8.5 million sale of a county facility, as opposed to thoroughly examining the feasibility of building a controversial and publicly funded $150+ million convention center project (in which Lancaster Newspapers was a major private investor), was a question the editors were not going to ask themselves, at least not publicly.

Six days before the final vote to close the Conestoga View sale, on September 22, 2005, Senator Gib Armstrong and Lancaster Mayor Charlie Smithgall publicly called for Commissioner Shellenberger’s resignation.

“The guy is out of control,” Armstrong was quoted on the front page of the Lancaster New Era. Armstrong cited Shellenberger’s alleged pressuring of John Fry to resign from the LCCCA board and the handling of Conestoga View as the reason for asking for Shellenberger’s resignation.

(Shellenberger told NewsLanc:  “We did not ask Fry to resign.  He resigned from the board, and we appointed someone [Douglas] who would ask the questions the taxpayers wanted answered.”)

Mayor Smithgall, in the same New Era article, said:  “He should resign. It is time. … The county commissioners – Shellenberger and Molly Henderson – seem bent on killing any forward movement in the city, especially in downtown.”

Two days later, Commissioner Pete Shaub, the original and driving force behind the Conestoga View deal, reversed his position and announced he would not vote to finalize the sale. “The numbers just don’t add up,” Shaub said, citing controller Stuckey’s report. (According to the Grand Jury Report:  “During the recess [at the Conestoga View vote], Commissioner Shaub called Ms. Judge into his office and told her that he was going to vote against the sale but that she had better make sure that the other two voted for it.”)

On September 28, 2005, at a packed Commissioners’ meeting, Shellenberger and Henderson voted to finalize the sale. Shaub, though expressing privately that he wanted the sale to go through, dissented.

If the board of county commissioners, specifically Shellenberger and Henderson, thought the media firestorm would end after the sale of Conestoga View they were mistaken.

The scale and vitriol of the response in Lancaster Newspapers after the vote could not to be anticipated. Letters condemning the sale continued. “Clyde” kept grousing about it each week. In the month after the sale, there were 37 separate articles and letters on Conestoga View. All were negative except for one – Commissioner Henderson’s explanation (“Why we sold Conestoga View”)..

The first Sunday News editorial after the vote, (“A shameful deal” on October 2, 2005,) captured the tone of the Lancaster Newspapers’ response:

“Barring a miracle, by the time you read this, Conestoga View will be the property of Complete HealthCare Resources. The sale was to take effect at 12:01 a.m. Saturday.

“We’d hope the Lancaster County commissioners would be ashamed, but they’ve proven themselves a shameless lot.

“They did a sloppy deal in secret to sell the county nursing home, sprang it on the public, then whined that the county would lose millions if the commissioners backed out. …

“…With a gang that not only can’t shoot straight but can’t even shoot themselves in the foot properly, why should we trust that they’ve done the right thing by the people of Lancaster County?”

That was far from the last word on the subject.

Former mayor, Art Morris, was not letting go of the issue. His approach after the vote seems to have been to try to find an issue, any issue, that would reverse the sale, or cast the commissioners in a disreputable light for making it.

Morris criticized the commissioners on the hiring of lawyers; specifics of the deal; and the speed the sale. He followed Conestoga View vans after the sale was complete, reporting they hadn’t changed license plates. He wanted to know why county-issued gas cards were still being used.

And in the days and weeks following the September 28 vote, all three Lancaster newspapers continued to publish articles, some two-and three-thousand words, harshly critical of “the commissioners.” Most ran with photographs of all three commissioners, or of ‘citizen’ Morris commenting on commissioner malfeasance.

But the fact is that the sale of Conestoga View was perfectly legal. State law did not require, by specific exemption, the county put the property out for bid. Multiple appraisals were required by the County Code before it was sold. The county got multiple appraisals.

(In fact, the new ownership continues to receive high ratings from the state and there have been little if any newspaper reports critical of its operations.)

In late October 2005, four weeks after the final sale of Conestoga View, Art Morris finally got his wish. His ‘throw-everything-against-the-wall-and something-will-stick’ approach yielded a direct hit: Gary Heinke.

Heinke, Shellenberger’s friend hired as Chief Services Officer for the county in 2004, was first mentioned as a target of investigation on October 24.  In a New Era article, “Who is Gary Heinke?” questions were raised by Art Morris about Heinke’s background and credentials listed on his resume.

On that same day, the commissioners announced they were ordering an investigation into Heinke’s hiring. The head of the county’s human resources department, Thomas Myers, led the investigation.

The next day, October 25, Heinke told the commissioners the information on his resume was accurate.

On that same day, an article published by the New Era (“A question of credentials”) uncovered several glaring misrepresentations on Heinke’s resume. It also was revealed that Gary Heinke not only received advice from Shellenberger, Shaub, and solicitor John Espenshade prior to his hiring, but he also substantially lied about his work experience and educational credentials.

On October 28, Gary Heinke resigned as Chief Services Officer.

On November 10, the day the Myers Report was to be released, Lancaster County District Attorney Donald Totaro announced his grand jury investigation, and blanketed the fifth floor with more than 80 subpoenas, including all three Lancaster County Commissioners.

Totaro launched the investigation before reading the Myers report. The Myers report concluded that Heinke falsified his resume, but not his county application for employment.

It didn’t seem to matter what the Myers report said;  Totaro was going to use Heinke’s hiring to investigate the Lancaster County Commissioners.

“I hope [the District Attorney] expands the investigation to include all aspects of the Conestoga View sale,” said a pleased Art Morris after Totaro’s announcement.

Again, Art Morris would have his wish granted.

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Thirty-ninth in a series by Christiaan Hart-Nibbrig

“Quite simply, the Convention Center Authority was the worst organization I have ever encountered, let alone been a part of. It is very clear that the authority had no regard for the source of its revenues, the taxpayer.”

– Laura Douglas, appointed by the Lancaster County Commissioners in September 2005, and served until 2008, of her service on the Lancaster County Convention Center Authority board of directors

If the building of the Lancaster convention center project is viewed as a civic civil war, then the conflict can be seen as pitting the ‘sponsors’ against the ‘opponents.’

In 2005, the sponsors of the project were the elite of the Lancaster political and business establishment. The county’s largest industrialist, Dale High; its monopoly press, Lancaster Newspapers; largest bank, Fulton, were the “private” sponsors, known collectively as Penn Square Partners.

They were joined by officials like then-Lancaster city mayor Charlie Smithgall, state Sen. Gib Armstrong, state Rep. Mike Sturla, former county commissioner Paul Thibault, and the majority of the members of the Lancaster City Council. Smithgall’s successor, Rick Gray, also became a sponsor of the project following his election in November, 2005.

Finally, establishment organizations like the Lancaster Chamber of Commerce, Franklin & Marshall College, and various business groups, formed the leadership for the sponsors’ side.

The opponents were a much more loosely aligned group of individuals. The political leaders of this group would have been County Commissioners Dick Shellenberger and Molly Henderson. Chairman Shellenberger and Henderson, who expressed support for the project in 2003 but not  for the $40 million county-backed guaranty, had become sharply critical of aspects of the project by 2005.

The rest of the opponents were an eclectic brigade of Lancaster citizens. The first opponents were the county’s hotel and motel owners, who spent many hundreds of thousands of dollars in losing battles fighting the room rental tax in state courts.

Ron Harper, Jr., April Koppenhaver, RB Campbell, Randy Carney, Robert Field, Victor Capecce, Tom Despard, and Luis Mendoza were some of the people who invested time, money, and, some, considerable expertise in an attempt to check what many viewed as a runaway project.

Until September of 2005, the Lancaster County Convention Center Authority (LCCCA) board of directors would have been firmly counted in the ‘sponsors’ column. At its inception in September, 1999, and again in 2003, both the county board of commissioners and the Lancaster city mayoralty were controlled by sponsors of the project. This meant that sponsors were able to name all seven members to the LCCCA board. And the decisions the board made consistently redounded to the benefit of the private project sponsors.

By the fall of 2005, however, the addition of county appointees Laura Douglas, Deb Hall, and Jack Craver to the LCCCA promised to make it a more confrontational board.

“We selected these people because they were going to ask questions that we were not getting answers to,” said Shellenberger. “We hoped the [LCCCA] board would answer their questions.”

The LCCCA board that Douglas, Hall, and Craver joined was led by chairman C. Ted Darcus.

If former county commissioner Paul Thibault (an academic raised in Canada) was an unlikely player in insular Lancaster politics, Ted Darcus was an even rarer find. Darcus, short, black, and Republican, who grew up in Fairmount, West Virginia, found himself, in late middle age, something of a political powerhouse in the city of Lancaster, Pennsylvania.

In September, 1999, in his final months on the Lancaster City Council, Darcus, as president, voted to approve the establishment of the LCCCA board. Four years later, in September, 2003, Darcus was named to the board he helped establish.

On January 12, 2004, the 63 year-old Darcus, a former high school basketball star, was voted by his fellow board members chairman of the Convention Center Authority board.

Darcus seemed to take meeting management tips from his predecessor on the board, Jim Pickard, who ran the LCCCA meetings with an authoritarian, imperious iron gavel. As with Pickard, under Darcus questions from the public – during public meetings – went unanswered.

Ted Darcus, the executive director of the Boys & Girls Club of Lancaster, could be a rude and belligerent chairman. He had a habit of intentionally looking down at his desk when a member of the public was speaking, often pretending to read or write while citizens tried to make their points. Questions from board members were openly discouraged.

Under Darcus, no LCCCA committee met on a regular basis.

Rodney Gleiberman, general manager of the Continental Inn and a plaintiff in lawsuits against the LCCCA, and who attended dozens of meetings chaired by Darcus, had this blunt assessment of the chairman:

“Ted Darcus was a hot-headed, dimwitted, single-minded presence on the Authority board. The man has very poor communication skills. While these might be tolerated qualities in a private company, they are totally inappropriate for running a ‘public’ entity. He was an embarrassment as chair of the LCCCA board of directors.”

Laura Douglas, the businesswoman appointed by the county commissioners in September,2005, and who served until 2008, said to NewsLanc of her time on the LCCCA board:

“Quite simply, the Convention Center Authority was the worst organization I have ever encountered, let alone been a part of. It is very clear that the authority had no regard for the source of its revenues, the taxpayer. … Mr. Darcus was a very strongly divisive force on the board. He was blinded by certain issues, and instead of considering them, would go ahead and move forward.”

The other three city appointees were notable for not being noticed.

Willie Borden Jr. was the only original member still on the LCCCA board. Borden, a journeyman electrician with power company PP&L, barely spoke at the meetings, and almost never voted against Pickard and the majority of the board. His was a dependable vote.

Dave Schwanger owned a successful heating oil company with his brother. In 1998, Schwanger was recruited by Sen. Gib Armstrong to run against Rep. Mike Sturla for Sturlas’ seat in the state legislature. (Schwanger was trounced on election day; Armstrong won easily). Schwanger was also personal friends with project sponsor, Lancaster Mayor Charlie Smithgall, who named him to the LCCCA board. Schwanger was even less noticeable on the dais than the practically mute Borden. He, too, voted with the other city members en bloc.

The fourth member of the city’s LCCCA appointees was Joseph Morales, a native of Brooklyn who came to Lancaster during his teenage years in 1978. Morales worked as an instructor and administrator for IU13, an education services organization that serves public and private schools in Lancaster and Lebanon counties. Morales was more vocal during public meetings than either Borden or Schwanger, occasionally commenting on an agreement, or making a statement, but, he like the other city appointees almost never broke ranks when it came time to vote.

(Since leaving the LCCCA board in 2007, Morales has been the well remunerated executive director of the controversial Lancaster Community Safety Coalition, a privately-owned organization that has hundreds of cameras throughout Lancaster. The LCSC is a subsidiary of the Lancaster Alliance, the organization founded by Dale High, Rufus Fulton, Jack Buckwalter, and nine others in 1993.)

So while the city appointees, with the exception of Ted Darcus were not demonstrative, and none had expertise in the hotel or convention industry, there was little question how the city’s appointees saw their roles on the board.

The schism between the city and county appointees on the LCCCA board was used by supporters of the project as an example of the county commissioners’ supposed anti-city bias on the project.

“I always had a problem with the idea that I was ‘anti-city,” Shellenberger told NewsLanc. “I was very familiar with the city, and I wanted to do what was best for the city. We [the commissioners] supported Clipper Stadium, invested in the Northwest Corridor, and other important city projects. Again, the convention center involved county taxpayers’ money, and we didn’t want the public’s money wasted or poorly spent.”

The LCCCA had two more people on the board that would be considered in the sponsors’ camp.

One was David M. Hixson, the board’s executive director. Hixson was the third Executive Director hired by the Authority. The first was Pickard, who was both chairman and acting executive director at the board’s inception in September, 1999. Pickard stepped down as executive director in the spring of 2002, and Michael Carper, a former banker and property manager with hotel executive experience, was hired shortly afterward to replace him.

Carper quit suddenly after just six months on the job. The circumstances of Carper’s departure were sealed in the confidential termination agreement between Carper and the Authority.

Hixson was hired in the summer of 2003 to oversee the authority’s day-to-day activities and manage all phases of the project – contracts, construction, personnel, bill paying – from the Authority’s position.

The round-faced, bespectacled, Hixson wasn’t a particularly articulate or dynamic speaker. Hixson had no experience in either the hospitality or convention center industries. Most of former positions were as a press spokesperson. He had a supervisory position with the department of labor in the Ridge administration before coming to the authority.

Hixson didn’t appear to grasp some of the more complicated details of the project, seeming rather lost at times during meetings. But whatever acumen Hixson lacked didn’t discourage Jim Pickard’s recommendation, and it was on that basis that Dave Hixson was hired for the $80,000 a-year (plus benefits) position. One month later after Hixson was hired, Pickard resigned from the board.

When either Ted Darcus or Dave Hixson had a question, they would look to the end of the dais for the answer. Seated there, as he had since the first LCCCA meeting in 1999, was John Espenshade, the board’s solicitor.

Espenshade and his law firm, Stevens & Lee, wore several hats in the development of the convention center and hotel project. Apart from representing the LCCCA, Espenshade represented the county of Lancaster for more than 10 years. Stevens & Lee was also the registered lobbyist for Penn Square Partners’ General Partner, High Industries. Stevens & Lee was also the firm that authored the 1994 Pennsylvania Third Class Counties Convention Center Act, allowing a room rental tax to be imposed to pay for the construction of a convention center. Stevens & Lee also received the majority of legal work commissioned by the LCCCA.

Although the LCCCA board was divided 4-3 in favor of the sponsors, with Hixson and Espenshade, it was more like a 6-3 division, with the sponsors controlling the executive director, chairman, and solicitor positions.

The city LCCCA board members’ and the executive director’s relative lack of experience in the convention center and hospitality industries contrasted with the county appointments.  Douglas was the hands-on owner of a thriving international manufacturing business.  She was used to reviewing complex legal and business agreements.  Hall oversaw the chamber of commerce for one the county’s largest boroughs.  Finally, and especially, there was the county’s newest appointment, Jack Craver, who worked in the hotel industry for decades, including several years as general manager of New York’s famed Plaza Hotel.

Whatever the lack of qualifications of  Hixson and the city appointee board members  (be it accidental or on purpose) , the sponsors’ side had the benefit of  nearly $10 million of services from hotel sponsor /  project manager the High Group and the law firm of Stevens and Lee.

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Next installment:  The commissioners under attack

As we have expressed before, the series is a work in progress and therefore changes are often made to past published installments as new information becomes available and insights sharpen.

For example, the current “Shake-up at the Convention Center Authority and a new mayor plays Hamlet” has been updated a half a dozen times over the past two days and  now is more substantive and analytical.  Furthermore, as time permits, information and links will be added to earlier installments.

The series covers far more than just the single project.   It sheds light on happenings over an entire decade and how they impacted one another.

Upon completion, the series is to be edited into a book to be published and also posted on a standalone web site.

Thirty-eighth in a series by Christiaan Hart-Nibbrig

“I don’t believe in serving on boards where I am not wanted.”

• John Fry, then President of Franklin & Marshall College, in a letter of resignation to Commissioner Dick Shellenberger.

Concerns of the project sponsors about the Shaub, Shellenberger, Henderson board of county commissioners were realized at the end of their first year in office at the close of 2004. It was in December of that year when Dick Shellenberger, with the support of Democrat Molly Henderson, replaced fellow Republican Pete Shaub as chairman of the board.

The alignment of Shellenberger and Henderson was more than just an irritant to project sponsors. The two county commissioners were an existential threat to the project.

The “57 Questions” the pair posed to Penn Square Partners in February, 2005, had gone unanswered, and led them to question openly a number of issues pertaining to the project, from de-coupling the room rental and excise taxes, to revoking the county guaranty. Grounds for a county-sponsored law suit was also explored in the first months after Shellenberger took over as chair.

One problem the sponsors did not anticipate until 2007 was the composition of the Lancaster County Convention Center Authority (LCCCA) board of directors.

The LCCCA board was established in 1999 as a seven-member body, jointly authorized by the county and city of Lancaster. At its inception, the county was given four seats; the city, three.   In 2003, the county lost a seat to the city, giving the city the majority on the LCCCA board.

In 2007, the board of commissioners – now effectively the Shellenberger, Henderson board – the swing vote would revert to the county. That was when the sponsors expected the county to pose a problem on the LCCCA board.

On, September 1, 2005, the three county-appointed board members were: Judy Ware, John Fry, and Garth Sprecher.

Ware was a former art teacher and, with husband Paul Ware, a philanthropist whose four-year term was coming to an end on September 15, 2005. During her time on the board, Ware was regarded as an enthusiastic supporter of the project. Although Ware and the sponsors of the project wanted her to be re-appointed to the authority board, Shellenberger and Henderson replaced her when her term expired.

Ware’s replacement on the LCCCA board was Laura Clampitt Douglas, a tough, smart, sophisticated businesswoman who didn’t suffer fools. At Douglas’ first LCCCA board meeting, she peppered the chairman, Ted Darcus, and executive director, Dave Hixson, with questions and comments on bills the board was paying.

John Fry was then president of Franklin & Marshall College, the private, liberal arts college located in the northwest section of Lancaster city. In 2003, Fry was appointed to replace Jim Pickard on the LCCCA board. Pickard’s second term had begun only a month earlier. (Pickard, the board’s first chairman and executive director, stepped down from those positions in 2002, but remained a voting board member.)

“We are lucky to have someone of John Fry’s caliber on the board,” said a beaming (soon to be ex-) Commissioner Paul Thibault, announcing Fry’s appointment, in October, 2003.

Fry, like Judy Ware, was known as a committed supporter of the downtown project.

According to the county ordinance establishing the LCCCA by-laws, the county’s terms were to be four-year appointments. Therefore, it was assumed Fry’s term ran until 2007. However, when Fry was named at a regular commissioners’ meeting in 2003, it was recorded in the minutes of the meeting that his term would end in 2005. A letter sent to Fry confirming his appointment transcribed the error from the minutes, with the letter also stating that the term would end in 2005.

One afternoon in late September, 2005, with these two documents – the minutes and the letter – Shellenberger brought county treasurer and fellow Republican Craig Ebersole to meet with Fry and showed him the letter and minutes indicating his term was expiring. The next day Fry submitted his resignation to the county commissioners.

“I don’t believe in serving on boards where I am not wanted,” Fry wrote in a letter to Shellenberger. “For reasons that are not clear to me, you have requested that I immediately submit my resignation as a member of the Authority.”

Shellenberger and Henderson appointed Deb Hall, president of the Ephrata Chamber of Commerce, to the LCCCA board. Like Douglas, Hall was intelligent and tough-minded. If anything, she had a harder edge than Douglas, and she, too, had questions about the project.

In October of 2005, businessman Garth Sprecher, was one of only two original board members still serving on the LCCCA board. Citing fatigue, Sprecher announced he was resigning from the board on October 15.

“Don’t read anything into this,” Sprecher said at his last LCCCA meeting. “I’m just tired.”

Sprecher’s seat was temporarily filled by Timothy Lease, a general manager of a large Mountville motel. Lease resigned suddenly after less than a week due to personal issues. He was replaced weeks later by another Shellenberger and Henderson pick, Jack Craver. Craver was a former hotel executive with decades of prestigious experience in the hospitality industry, including management of the world reknown Plaza Hotel in New York City.

The changing face of the convention center authority board meant that the days of unquestioned ‘rubber stamping’ of agreements and consultants fees were coming to an end. If the LCCCA was going to debate among itself about documents and invoices, then the project could be delayed, perhaps even terminated. In the months to come, the new board members would clash repeatedly with the board’s chairman, Ted Darcus.  (Editor’s note: To be described in detail in a future installment.)

While the uncertainty of the project’s future seems not to have affected the Republican running for mayor of Lancaster, die-hard supporter, Charlie Smthgall, it did seem to influence the Democrat candidate for mayor in 2005, Rick Gray. Gray was a local attorney with a reputation of representing the disreputable. The burly, goateed, bow-tied Gray seems to have played a Hamlet-esqe struggle on the public stage.

“The project proposed by Penn Square Partners holds a promise of good for the county, the city and the school district.,” Gray stated on March 22, 2005.

NewsLanc’s publisher Robert Field recalls a meeting at Gray’s invitation on Sept. 8^th and Gray expressing some concerns about the Convention Center project.

Consistent with Field’s recollection:  “If elected mayor, Rick Gray would immediately meet with his top advisers to evaluate the viability of the downtown hotel and convention center….Keeping the county commissioners’ concerns in mind,’ he told the Lancaster Rotary Club Wednesday, if he and his advisers decide it is not what the city needs, Gray said he’d ‘pull the plug; on the $134 million project. . . .” (Excerpted from Lancaster New Era, Oct. 13, 2005)

Yet on October 31st, Pat Brogan, who had come over  as chief-of-staff from State Rep. Mike Sturla’s office to be director of  “Campaign Issues & Communications” in Gray’s campaign, wrote to Field: “If elected, Rick Gray will convene a group of objective individuals to discuss how this project can be moved forward in an expedited manner.  If this group determines that the project cannot proceed on a timely basis, Mr. Gray [will] work with the group to develop an alternate plan.” 

Nevertheless,  on December 09, 2005, only weeks before being sworn in and after reading a memo from the firm that performed a market study of the project disavowing the current enlarged project, Gray said again: “We’re taking a good look at the project right now with the idea of whether we can move it ahead or not.”

Twenty-five days later, one day after being sworn in, Lancaster Mayor Rick Gray strode into the Farm & Home Center, where the three new county appointees had called a special public meeting to hear from the public on the project.

The room was filled with more than two hundred citizens, the overwhelming majority opponents of the project.

The audience quieted as the new Mayor approached the microphone. Then in sharp, combative, almost hostile tones, Gray voiced strong support for the project and his frustration at project opponents for trying to stop it.

“Where are your alternatives?” he snarled. “If we don’t use this money it’s going somewhere else. If we don’t use it, it’s gone.”

The crowd was stunned. A few clapped. Some booed.  Most were quiet. Then Gray turned and rolled out of the room. But the time was not far when the new mayor would again publicly display his uncertainty.

Thirty-seventh in a seriesby Christiaan Hart-Nibbrig

The galvanized and growing opposition to the proposed hotel and convention center presented a formidable challenge to project sponsors.

The emergence of April Koppenhaver, and Randy Carney, and Robert Field, along with Ron Harper and other estimable people in the larger Lancaster community, meant that the county commissioners, specifically Dick Shellenberger and Molly Henderson, had a swelling of support behind them in questioning the increasingly expensive, taxpayer subsidized project. These people were used to being heard.

As noted, the sponsors of the project – High Industries, Lancaster Newspapers, equal partners, and Fulton Bank, minority investor – had serious concerns about the two (now majority) commissioners. It was the county assessment office that had the responsibility for determining whether the property would have tax-exempt status. In September of 2007, the county would be able to appoint the swing vote to the Lancaster Convention Center Authority (LCCCA) board, giving the county appointees, not Smithgall’s city board members, the decisive majority.

It was also clear Shellenberger and Henderson were going to examine a variety of other concerns, including the October, 2003, $40 million ‘midnight’ county guaranty, the hotel room tax, and other issues of the feasibility of the project. A possible lawsuit challenging Act 23 funding was also publicly discussed by the two commissioners.

It was late spring of 2005, and the project was far from complete. Not a shovel of dirt had been turned, funding was not secured, architectural drawings were not finished, and the public was demonstrably becoming more impatient and resistant to the project. It was a project with a very uncertain future.

Then the sponsors were presented with an opportunity which they seized with gusto, and it came in the form of the sale of a 200 year-old, county-owned nursing home called Conestoga View.

Before the summer of 2005, if the Conestoga View nursing home was mentioned at all in any of the Lancaster newspapers it was in the obituary section. By the end of the year, it made the front pages, the editorial pages, and letters-to-the editor pages almost every day of the week.

The facts around the sale of Conestoga View began in the summer of 2003.

The idea to sell the facility, which employed about 20% of the county workforce and housed the county morgue in its basement and the youth intervention center on its 40 acre grounds, was first raised sometime during the sticky ‘dog days’ of that campaign summer when sitting commissioner Pete Shaub brought it up with county solicitor, John Espenshade.

(Espenshade, a partner at the politically connected firm of Stevens & Lee, was also the solicitor for the Lancaster County Convention Center Authority [LCCCA]. Stevens & Lee was additionally the registered lobbyist for High Industries, as well as the authors of the project’s original enabling legislation, the Pennsylvania 19994 Convention Center Act.)

Shaub and Shellenberger were the two leading Republican vote-getters in the spring primary, which virtually assured they, in GOP-dominant Lancaster County, would be elected to the three-person board of commissioners. The only open question during the campaign was whether maverick Constitution Party candidate, Jim Clymer, running on an anti-convention center platform, would upset both of the Democrats on the ballot, Molly Henderson and Bill Saylor.

During the summer of 2003, Shaub and Shellenberger, despite differences in temperament, often campaigned as a team. In September, when Shaub spoke to Shellenberger about the possible sale of Conestoga View, Shellenberger agreed with Shaub that the county should sell the facility. Both believed that selling Conestoga View was consistent with their interest in shrinking government, a standard part of the Republican platform.

“Conestoga View was losing money, and we felt this was the kind of thing that government should not be doing,” says Shellenberger today. “This was the philosophy I campaigned on.  Any thing the private sector can do, the government should not be competing and doing.”

Since Shaub was the only sitting commissioner during these pre-election meetings, they were not in violation of the state’s open records, or Sunshine Act, requirements.

After taking office in January, 2004, Shaub and Shellenberger, with solicitor Espenshade, continued to pursue selling Conestoga View to Complete Healthcare Resources, the private company that had operated the facility for more than a decade. But now that Shellenberger was in office, meeting with Shaub privately to discuss potential legislation meant violating the Sunshine Act.

The two commissioners, according to a later grand jury investigation into the sale, deliberately and carefully kept newly-elected Commissioner Molly Henderson ‘out of the loop’ and completely ignorant of these ongoing negotiations. Shellenberger and Shaub were able to circumvent the Sunshine Act restrictions by either meeting with Espenshade individually, or by using a common practice known as “walking the halls.”

Walking the halls is a term used to describe when a surrogate of one official, in this case a commissioner, meets with another commissioner, then the surrogate “walks the halls” back to the other commissioner’s office and briefs him. This goes back and forth, and it is done frequently as a practical way of not awaiting  a public meeting in order to discuss matters.

The person walking the halls on behalf of then-board chairman Shaub was County Administrative Officer, Don Elliot, (who used Penn Square Partners’ Nevin Cooley as a reference on his application).

The person walking the halls as Shellenberger’s representative was an administrator with a newly created position of Chief Services Officer (CSO) named Gary Heinke.

Gary Heinke and Dick Shellenberger were close personal friends. They had worked together at one of Shellenberger’s former jobs, and been fellow church members before Heinke left Pennsylvania and moved with his family to Minnesota to pursue a doctorate.

After Shellenberger won the Republican endorsement in early 2003, he contacted Heinke and asked his friend if he would be interested in working as the CSO for the county after Shellenberger (presumably) took office.

Heinke was interested in the position, and Shellenberger, Shaub, and Espenshade all helped Heinke get the job by sending him material and job related questions in advance of the formal interview for the position. The the two Republican commissioners and Espenshade also had several meetings with Heinke, none of which the other candidates for the position received. [Elliot was the only candidate to receive advance material for the Chief Administrative Officer (CAO).]

Neither Henderson nor the county human resources department were aware of the preferential treatment afforded Heinke and Elliot.

Heinke was hired as CSO, and he began work on March 29, 2004. Weeks later, his job responsibility was expanded to include supervising five new departments, and overseeing Conestoga View.

During 2004, as negotiations continued between Shaub, Shellenberger, Espenshade , their surrogates, and the private company then running Conestoga View, the relationship between Shaub and Shellenberger deteriorated drastically. Shaub, with a well-earned reputation as high strung and volatile, was known to be abusive to staff, as well as his fellow commissioners.

Shaub’s outbursts were so well known that a story had been published in one of the Lancaster Newspapers about his abusive behavior. It wouldn’t be the last item about Shaub’s antics. His behavior toward highly regarded county planning department, Ron Bailey, led to Bailey’s resignation.

Shellenberger, though mild and congenial personally, was sincerely and increasingly concerned about the convention center financing, and was demanding answers from project sponsors. Shaub, conversely, was a staunch supporter of the project.

“As I said back then,” Shellenberger explained to NewsLanc, “the project involved a great deal taxpayers’ money, and the more I tried to learn about the project, which was difficult because we weren’t getting answers, the less sense it made to me.”

At the regular Wednesday public commissioners’ meetings, Shaub displayed a penchant for blindsiding his fellow board members with venomous verbal attacks.

“I’d like to know which side of your mouth you are speaking out of today,” he told Commissioner Molly Henderson at one such meeting.

Henderson never responded in kind to Shaub. The lone Democrat on the board, and only the second woman elected Lancaster County Commissioner, Henderson never lost her composure during these unprovoked attacks.

The deal Shaub, Shellenberger, and Espenshade (and associates) were working out with CompleteHealthcare Resources had the county selling the facility and the grounds for a total package of $13.5 million – $8.5 million for the buildings, the rest for compensation and assurances that no job cuts would be made and no indigent patients denied care. The morgue and the youth intervention facility would remain on the grounds.

On July 6, 2005, at a regular commissioners’ meeting, the commissioners’ voted to enter into an agreement to sell Conestoga View.

The first reaction in the Lancaster Newspapers appeared on July 10, 2005, in the “Coffee with Clyde” column, written by then-Sunday News editor, Dave Hennigan. The “Clyde” columns were a collection of poorly written observations and homilies put forth by Hennigan’s alter ego, Clyde. But the column printed on that Sunday in July had a decided edge to it. And it was clear in this column there was a voice other than Hennigan’s as “Clyde” considered Conestoga View.

Below is the first reaction to the issue that would dominate Lancaster Newspapers’ coverage more than any other in its history:

July 10, 2005

Coffee With Clyde

Good morning, Clyde. What’s going on?

“The county commissioners played a little ‘full steam ahead’ on Wednesday,” my jogging friend said, sipping his coffee.

Indeed, Clyde. What do you mean?

“They approved the sale of Conestoga View in record time, Mr. Editor. It took the commissioners only six days from when it became public to unload a piece of Lancaster.”

What’s the point, Clyde?

“What’s the rush, Mr. Editor? They pulled this stunt over a holiday weekend, when few people could react, and when a couple did complain, they ignored their request to postpone the vote…”

The first column did mention that Commissioner Henderson requested more time for public input before voting on entering into the sale agreement, but the other commissions wanted the vote done on that date.  Soon, the newspaper coverage conflated Henderson with the other commissioners as pushing the sale.

After the July 6 vote, as if by coordinated orchestration, letters to the editor opposing the sale also began to appear in all three papers.

“Last Wednesday, I learned that our county commissioners had been in secret negotiations for many months to sell the Conestoga View Nursing Home,” read a letter printed in the Intelligencer Journal on July 14, 2005.

“I would like to let the public know how the sale of Conestoga View has affected the staff and residents. The staff and residents were informed of the sale the morning before it came out in the evening newspaper. That was a slap in the face,” read another in the Lancaster New Era on August 13, 2005.

These letters were typical, and they were printed by the dozens during those summer months.

A readers “poll” in the Intelligencer Journal showed 96 percent of the self selected respondents opposed the sale of Conestoga View.

Prominent political officials and ex-officials (and ardent convention center supporters) – like former mayor Art Morris, former county commissioner Paul Thibault, and then-Lancaster city Mayor Charlie Smithgall – all very publicly voiced opposition to the sale. Morris, in particular, was especially vocal in his rebuke of all three county commissioners.

By the time the sale was voted on, on September 28, 2005, the unlikely issue of nursing home sale was front page news.

And the hunt had just begun…