Related Articles & Letters:

• LCCCA Board membership for suspect period
• Exhaustive research behind LCCCA series
• PWC Market Study: No vote of confidence
• PWC withdraws market studies, 2006
• LETTER: Were the Lancaster Newspapers’ intentions good?
• EDITORIAL: Good message for Judges Totaro and Farina
• Measuring success of Convention Center Project
• Did High try to “snooker” Gray to pay $5M twice?
• Convention Center series awaits libel trial; Summary through 2006
• Lancaster Post series about the hotel and convention center project
• A reminder concerning the Convention Center series
• Who do they serve? Part Two
• An invaluable supplement to the Convention Center series
• A futile plea to Wachovia Bank
• WATCHDOG: Intelligencer Journal
• LETTER: The Convention Center has indeed failed
• OP-ED: Court Tosses Henderson Lawsuit
• The history of The Lancaster Newspapers
• Why downtown redevelopment failed in Lancaster and succeeded in Charleston, WV
• LCCCA chickens come home to roost
• LCCCA Article #2: Consequences of Hotel Room Rental Tax on industry
• Special tabloid edition of NewsLanc on Convention Center Project
• Commentary on Sunday News “Convention Center is coming up short on money.”
• Confessions of a Convention Center “Naysayer”
• LETTER: Convention Center insolvent. Shellenbeger and Henderson proven correct
• Intell / New Era reverts to past bad practices when it comes to CC articles
• More LNP distortions and spin re CC “woes”
• LETTER: “Too big to fail” with tax payers on the hook
• Convention Center Authority calls for increase in Hotel Room Sales Tax
• LCCCA chickens come home to roost
• EDITORIAL: Have the Intell editors no sense of shame?
• LCCCA wants public to know it is being screwed by PSP
• What the Convention Center CSL Report really said

Nevertheless, the clear implications of the report were:  The convention center should not have been built in downtown Lancaster, it was poorly designed, and that the Convention Center Authority is being exploited through its one sided arrangements with Penn Square Partners and the High companies.  And lastly, there isn’t much that can be done about it.

The below excerpts and comments are in the order that the material is presented:

“The greater Lancaster area and surrounding ‘Pennsylvania Dutch Country’ has established itself is a well-branded, successful visitor destination. According to PDCVB estimates, as a whole, the destination attracts as many as 11 million annual visitors. The Bureau estimates that this visitor activity accounts for approximately $818 million in direct economic impact and nearly $460 million in indirect economic impact. Travel and tourism is reported to be the County’s second largest industry employing nearly 40,000 people, both directly and indirectly. Recent growth in this industry has been noted as well. Based on statistics from Smith Travel Research Inc., visitors to Lancaster County booked a record 1.42 million room-nights in 2011. The previous record was 1.40 million, set in 2007.”

They imply that downtown Lancaster is in the same tourist market as the balance of the region, which it is not.  Nor is much industry and commerce situated in downtown Lancaster.  Hence the failure of the Hilton later Ramada now Brunswick hotel, a four star facility when new that was far superior to the current Marriott three star rated facility.

Unlike marketing reports written during the planning of the hotel, they fail to mention the lack of highway access  to downtown.

They skirt the fact that the nearest significant commercial airport is thirty-five miles away in MIddletown.

They fail to explicitly point out that the various business and recreational attractions in the region are suburban and exurban, not downtown.    Of the 24 regional features they list, not a single one is within walking distance of the Convention Center and only one is within the city limits.

The 24:  Aaron & Jessica’s Buggy Rides,  HERSHEYPARK, Railroad Museum of Pennsylvania,  Adventure Sports in Hershey, Hershey’s Chocolate World, Rockvale Outlet Center, Amish Village,  Indian Echo Caverns, September Farm Cheese,  AvalancheXpress Snow Tubing,  Julius Sturgis Pretzel Bakery,  Sight & Sound Theatre,  Carlisle Sports Emporium,  Kitchen Kettle Village,  Strasburg Rail Road,  Cherry Crest Adventure Farm,  Lancaster Barnstormers Baseball,  Susquehanna Glass Factory Outlet and ,  Dutch Wonderland Family Amusement Park,  Lancaster Quilt & Textile Museum,  Tanger Outlet Center, Hershey Garden, President James Buchanan’s Wheatland, Turkey Hill Experience

Of the listed primary reasons for Visiting Lancaster County, only one, “Heritage, History and architecture” even partially relates to downtown.

“The most important non-convention center amenity is the hotel package. Without sufficient nearby, quality hotel product, convention centers are extremely challenged in attracting non-local conventions, conferences, tradeshows and meetings, regardless of the attractiveness of their facility and the community’s other supporting infrastructure. From a meeting planner’s perspective, assembling a room block in as few properties as possible is critical. Oftentimes planners will utilize no more than two to three properties as close as possible to the host facility. As such, the location of a market’s existing and planned inventory of hotel space can be critical in successfully accommodating events with a non-local attendee base.

“The market for conventions, tradeshows, meetings, banquets, and other such events in any community cannot grow beyond the hotel base available to accommodate out-of-town visitors. There is currently only one hotel property (the attached Lancaster Marriott at Penn Square) that could be considered to be located within walking distance of the Convention Center that provides what are generally considered to be ‘convention quality’ hotel rooms.

“ ‘Convention-quality’ is a term that varies based on the particular community and type of group considered; therefore, in order to accommodate as many different groups as possible it is important to offer a variety of hotel properties with varying price ranges and available amenities. The Marriott provides 299 total guestrooms. Based on conversations with property management, between 150 and 200 rooms are typically available to serve the needs of Convention Center events.”

Precisely what was anticipated by all the original marketing studies which were suppressed or selectively reported upon.   The CSL report fails to discuss why there are no other suitable hotels:  The historic paucity of  downtown hotel business due to the scant downtown commercial and tourist attractions.

Moreover, a few days ‘spill over’ days from the Marriott is not sufficient business to justify the Brunswick Hotel owners investing several million dollars to bring the hotel up to a standard that would achieve a prestigious franchise affiliation.

“Located within close proximity to Interstates 83 and 76, Lancaster is within a day’s drive to a number of major northeastern U.S. markets. Exhibit II-5 provides the driving distance (in road miles), as well as the approximate driving time, from Lancaster to select regional markets.”

Did they invest $10 in a road map?   Since when is Lancaster near I-83 and I-76, both about 20 miles away? Moreover, as noted on earlier market studies, there is no limited access road delivering cars to downtown.

“At 54.2 percent, occupancy levels within Lancaster County are very close to the overall average among the 14 competitive and comparable markets (54.6 percent).”

Misery loves company.  The report fails to mention how many of the “14 competitive and comparable markets” are also losing money.

“It is also important to assess the revenue per available room (RevPAR) ratio to determine the strength of the local/regional hotel market. In 2011 the RevPAR for Lancaster County was approximately $49.69 and has grown by more than 16 percent over the past three years. When the RevPAR is rising, it is an indication that either occupancy rates are improving or that room rates are rising (or some combination of both), typically indicating a strong/growing hotel market.”

If “RevPAR is rising”, how comes the proceeds from the Room Revenue Sales Tax have remained virtually stable, actually declining one year?   If indeed RevPAR has risen, it has risen very little and likely less than the rate of inflation.

“Based on PDCVB estimates, total trackable room nights associated with Convention Center event activity approximated 28,500 in 2011. This compares to an estimated 14,300 in 2010 and represents a nearly 100 percent increase in room night activity.”

Assuming that the Marriott booked every last one of them, which it can’t because some events provide more rooms than it can accommodate, that only comes to 78 rooms a night for a 299 room facility.   Is the market sufficient to provide at least 131 additional rooms per night to bring the hotel occoupancy to 70%, the usual percentage necessary to pay operating costs, debt service and taxes.  Oops…we forgot that the Marriott doesn’t have to pay real estate taxes!   So maybe its breakeven point is at 65%, which would require 116 additional room sales a night.

Since all of the room demand takes place during event dates, there is some displacement ….hence the need for more downtown rooms to attract major events.  But the spill over for say a dozen dates would hardly generate enough business to justify a second hotel or modernization of the Brunswick.

“Each year, the Convention Center hosts a variety of large events that generate significant levels of non-local spending (and associated economic and fiscal impacts). Exhibit III-2 lists several of the larger events that have recently taken place at the Center. Corresponding attendance levels are representative of total attendance over the entire event. For example a three-day event with 7,000 people per day has a total attendance of 21,000).”

What the report does not mention is that some of the events, such as the 16,000 day Quilt Society Show, used to take place on Rt. 30 East.   Not only are those hotels taxed to support the convention center and receive no business in exchange, but the very business that fed the hotels in the past has been lured away from them.  Some justice!

“As noted by approximately 15 percent of event planners, the inventory of hotel rooms within a walkable vicinity of the Convention Center prevents Lancaster from successfully penetrating many event markets with significant non-local attendees. This represents the number one specifically referred-to deficiency among responses.”

See above.  Although the region has ample industry, commerce and tourist attractions, there is little enticement for people to walk around downtown Lancaster, especially in the evenings.

“Other issues, such as a lack of direct air access, transportation concerns, canceled events, and related concerns were noted by nearly one-fourth of those questioned.”

If one can’t fly to Lancaster, why would any non-regional group book here?

“The existing inventory of hotel rooms within walking distance of the Convention Center is able to support approximately 25 percent of this national event market (for events requiring 10,000 to 50,000 gross square feet of exhibit space. Shuttling is required to support an event requiring 500 committable rooms. This highlights a competitive disadvantage of the Center when competing for rotating, room night generating events. To support the needs of an event requiring 800 rooms (75 percent of the market) would require five to six hotels. This review again underscores existing limitations with regard to the supply of hotel room surrounding and able to facilitate the demands several high impact events.”

This is information stressed in the initial marketing study and convincing reasons not to build so large of a center.  No marketing study recommended so large a convention center.  PriceWaterHouse Cooper actually withdrew its earlier market studies when it discovered that the facility was to be greatly increased in size.

(Is this motivation behind this report to seduce public funding for Penn Square Partners to  purchase the Brunswick?)

“Locations with considerably higher room tax rates relative to other markets can, for some events, negatively impact the likelihood of the location being selected.”

Yet LCCCA is requesting a still higher hotel room sales tax to cover convention center losses!

“… the PDCVB allocated an estimated $402,700 toward selling and marketing the Convention Center and other local and regional event space in 2011.

“This compares to an average of nearly $1.4 million among the communities reviewed and is significantly less than current expenditures in Virginia Beach, West Palm Beach, Madison and Lexington.”

Those convention centers  are several times larger!

There are all sorts of comparisons with other convention center but no mention of whether those cited centers are making or losing money.   Why not?

“As shown in the exhibit, with a net operating deficit of approximately $844,000 in 2011, the Convention Center ranks well compared to the average of the facilities reviewed in terms of net operations. Two facilities that were frequently cited as being competitive with the Convention Center within certain event segments (the Wildwood Convention Center and the Ocean City Convention Center) operate at annual deficits that exceed $3.5 million. Only one facility operates with a positive cash flow—a relatively rare occurrence among convention centers in the United States.”

Out of a ‘competitive set’ of 16 convention centers, only one earns a profit.  LCCCA loses a bit less than the average.  This could change when the newness wears off.  Moreover, the convention center is already  heavily subsidized from the proceeds of the Room Rental Sales Tax.  So we are talking about losses in addition to anticipated losses.

“As is typical in the industry, the majority of comparable facilities reviewed contract food service operations to outside vendors. Vendor commissions and the structure of the contracts vary among each facility, with most involving various percentages of gross food and beverage collections remitted to the center. At five percent of gross catering sales, the revenue split to the Authority is generally lower than that of similar contracts with other comparable convention centers across the country…

“The share of gross revenue allocated to the Convention Center owner (Authority) are somewhat below what is standard in agreements between convention center food and beverage vendors and facility owners. These agreements provide for owner revenue sharing at the 10 to 25 percent range. We also note that there is a provision in the agreement that calls for the Authority to fund 100 percent of Kitchen Facility equipment, and that the Authority will maintain and replace these items as needed. The fact that the hotel is a significant beneficiary of the Kitchen Facility equipment is not reflected in this component of the agreement. Finally, we note that agreements such as this are often negotiated in the context of larger facility development and financing agreements, and any areas that diverge from industry standard may result from the accumulation of terms and provisions in the global set of agreements.”

The report provides statistics showing Food and Beverage revenues from the comparable set are Average = $9.03 Median = $6.60.  LCCCA receives only $3.39.  Why?  There was a ‘sweet heart’ deal with a subsidiary of the High Companies who pay a far lower commission than is the industry norm.   The voluminous documents were only provided LCCCA board members less than two days before the meeting and Chairman Ted Darcus refused a request by three members to postpone a vote until a later special meeting or regularly scheduled one.

“In 2009, 2010 and 2011, LCCC utilities expenses were more than $200,000 higher than originally projected.

“Total Utilities Expenses per Square Foot – Competitive and Comparable Facilities…

Average = $6.40 Median = $5.50  Lancaster:  $8.27.”

Why so high?  There are two obvious reasons.   The atrium design which continues into the hotel lobby is nutty, making it necessary to heat and cool a huge area whether or not there is a convention center event.

High as manager of the project did not provide for more than a single electric meter for both the convention center and the hotel.   Who is paying for what?

Information on whether the Convention Center has added sufficient business to downtown to at least  make  the Marriott profitable is not available to the public.   Of course, if it is in economic distress and the owners choose not to subsidize the losses, then the problem will eventually become public since the City of Lancaster has guaranteed the debt.

We do not see where the CSL reports adds much useful information not already available from the initial largely negative marketing studies, either suppressed or misreported upon by the Lancaster Newspapers, and by NewsLanc’s “Convention Center Series”.

Although current management and board bear no responsibility for the shortcoming of the convention center design and legal arrangements, we are disappointed that they accepted a report that does not clearly and courageously set forth the plight, marketing expectations, and funds likely needed over the future decade to prevent bankruptcy.

The CSL reports is but another market study.  What was needed is a feasibility study.  History repeats itself.

LETTER: Visit “CSL report clearly avoids addressing the root causes of the convention center’s debt issues” for an important supplement to the above.

My theory is that the LCCCA wants the public to know just how badly they – and the taxpayers who support them – are being screwed by the Penn Square Partners.

http://www.lccca.com/priorities/food-beverage-agreements/

http://www.lccca.com/priorities/joint-development-agreements/

http://www.lccca.com/priorities/interstate-hotels-resorts/

http://www.lccca.com/priorities/ordinances-and-county-guaranty/

http://www.lccca.com/priorities/penn-square-condominium-association/

http://www.lccca.com/priorities/penn-square-partners/

http://www.lccca.com/priorities/pennsylvania-dutch-convention-visitors-bureau/

http://www.lccca.com/priorities/professional-services-development-agreements/

All of these can be accessed via the “Library” pull-down menu at this link: http://www.lccca.com/priorities/

“A dozen years ago, when proponents of a Lancaster County convention center were proposing building a meeting center, county business leaders would annually drive to Hershey for the Chamber of Commerce dinner.

“On Wednesday, the morning after former British Prime Minister Tony Blair addressed about 2,500 Chamber members upstairs, a consultant reminded many of those proponents how far they had come.

” ‘It’s not just about the money,’ J. Mark Tobin, a principal of Colorado-based Hospitality Real Estate Counselors, said of the benefits of the 3-year-old center.

“Yet the problems facing the center are financial problems.”

Yes, once a year the Chamber of Commerce is convenience not to have to sit in the Franklin and Marshall Field House or travel an hour to another location.  Such an imposition!

Same old spin. Same old manipulation of data.  Same old self serving reporting.    It is so sad that even now the editors are blinded (or worse) to their folly, and to their incredible disservice to the community and vicious attacks on conscientious elected county commissioners.

What about the scrapping of plans to renovate and enlarge the Lancaster Public Library along with dozens — yes dozens — of like benefits that could have been achieved for the citizenry here and elsewhere for the almost $185 million in development costs (all things taken into account), the $100 million in taxes on local hotels over the life of the project (and they don’t benefit from the Convention Center), the $50 million in lost real estate taxes, the tens of millions of additional taxes to be levied to fund the Convention Center debt, and the specter of the ‘other shoe dropping’ and the City having to bail out the Marriott Hotel?
The article continues “Kaatz and Tobin said a proposal to raise the hotel tax by 1.1 percent, to 5 percent, could restore the money to the visitors bureau and help the center gain short-term financial footing.  That would get the center past a scheduled March 2013 debt restructuring.”

Debt restructuring?   As the economy improves, interest rates are certain to go up.  How will refinancing the current relatively low interest rates at say a 2% higher rate do anything but make things worse?

That is just the beginning of the bad news:  “Also cited by Kaatz was the prospect of a local restaurant tax or imposition of an additional 1 percent countywide sales tax. Those would require approval from the state General Assembly.”

Still more taxes on the citizenry.  Another setback for the tourist industry and local businesses.

Then we receive worser news:  “State Rep. Mike Sturla, who attended the presentation, said the additional sales tax could generate $66 million annually and could be done for a short time, such as a year or two. Philadelphia and Pittsburgh both have such additional sales levies, Sturla said. ‘That seems to be the easiest solution,’ Sturla said.” Easy for whom?

Guess who is quoted for the excuse on behalf of S. Dale High and the Lancaster Newspapers, principal sponsors of the Convention Center and equitable owners of the Marriott Hotel?  “Nevin Cooley, president of Penn Square General Corp., which developed the Lancaster Marriott at Penn Square hotel, noted that the facility opened in the worst economic climate ‘that any one of us will experience.’”

For newcomers to the County and those with short memories it was Cooley who five times in a letter to a public official maintained that there had been a “feasibility” study for the Convention Center, and there isn’t a shred of evidence yet produced that one existed until years later the County Commissioners funded the PKF Report.  The PKF Report envisioned exactly what has occurred and urged that either the project be downsized or a different use found for the site.

In his blog  ”Center of Attention”, Sunday News Associate Editor Gil Smart at least half a day earlier accurately reported on the same story.  Why didn’t the Intell editors publish his article?

It is disappointing that the readers and those whom the  Intell viciously savaged in the past will never receive an apology from The Lancaster Newspapers.

We would have expected more by now from the Steinman family.  If this happened on the Watchdog’s watch, heads would roll!   It is bad enough to allow a terrible mistake to occur.  It is another to continue to be in denial.

“Was at the convention center consultant presser this morning, and came away with a different take than what we’re reporting here.

“The big takeaway from the presentation is this: Not only is the hotel tax going to have to rise – and soon – but to achieve a long-term, “global, forever” solution, additional, new sources of revenue are going to have to be conjured up in the near future.

“’Sources of revenue’ as in, taxes. Perhaps a countywide sales tax. Perhaps a food and beverage tax. Perhaps a levy/assessment on downtown businesses.”…

En route back home after a two week absence, we learned about the above from an e-mail from perhaps the most knowledgeable and a vociferous critic of the ‘white elephant”.  The subject line read:

“We told them so.”

Molloy states:  “I believe that the best solution for funding the shortfall faced by the Lancaster County Convention Center is the adoption of an increased hotel room guest tax. I recommend an increase of the hotel room guest tax to 5.0% from 3.9%.”

Molloy explains:  “If no action is taken, I anticipate that, as a result of a cash shortfall and in accordance with county ordinance, beginning April 2012 the bond holders of the convention center will receive 100% of the 3.9% hotel room guest tax revenue (instead of the current 80%, with the other 20% going to the CVB for destination marketing).”

He continues:  “A hotel room guest tax increase of 1.1% (approximately one dollar per average hotel room night) would benefit (1) the convention center and (2) the CVB’s destination marketing — the primary engine for attracting visitors to Lancaster County — and (3) the broad spectrum of hotels and businesses across the county affected by tourism.”

To substantiate the above, Molloy then provides a theory of Supply and Demand that raising the price of an item or service does not lose customers:  “The hotel room guest tax is paid by consumers, not by hotel owners. It is not an income or gross receipts tax. It is a tax paid by hotel guests. The proposed 1.1% increase would equal about one dollar on the average county hotel room rate of $90. The new rate would still be absolutely in line with regional and metropolitan markets.”

Countywide room rental sales taxes have declined in recent years and remains about the same for 2011 as for 2010.  This is despite the considerable addition to the number of hotels including the downtown Marriott.   Hoteliers have recently observed the result of achieving less revenue per guest room has caused many to defer usual and necessary investments in renovations and improvements, causing the region to become less attractive as a destination.   They have also noted that less people patronizing hotels means less visitors patronizing restaurants and recreational facilities.

If the convention center absorbs the revenue that now goes to the Visitors Bureau, there will be less promotion of tourism and convention center business, thus adding to downward spiral.

Two big questions not addressed are:   1) How close is the Convention Center to a bankruptcy that triggers existing county guarantees?  and 2)  What is the financial condition of the adjoining Marriott Hotel, whose debt is guaranteed by the City of Lancaster?

The equitable owner of the hotel, under a long term lease with option to purchase at a modest price, is Penn Square Partners, a venture of subsidiaries of the High Companies and the Lancaster Newspapers, Inc.

The downtown Lancaster hotel and convention center are indeed “too big to fail”, with nearly $50 million taxpayer dollars committed to the “private” hotel and well over $100 million already spent on the convention center (not counting unfunded municipal costs for both). All three current Lancaster County Commissioners have promised to not raise the “hotel tax” under any conditions, but the sad truth is that at some point they may have no alternative. I am convinced that rather than allowing the “integrated facility” to close, they will raise taxes.

There is yet another factor: the Penn Square Partners keep the financial performance of their “private” hotel a closely-guarded secret, in spite of the fact that Lancaster City owns the building they occupy, and taxpayers own all of the meeting rooms the hotel receives revenue from, the hotel kitchen, half of the hotel lobby, the facade of the Watt and Shand building, the surrounding sidewalks, and even the bridge connecting the hotel lobby to the parking garage.

The problem is, if the hotel does not meet its earnings expectations, the Penn Square Partners would most likely make additional demands on Lancaster City taxpayers, who own the hotel building and (thanks to former mayor Charlie Smithgall) guarantee the hotel’s financing. Under the threat of closing the Marriott Hotel, the mayor and city council would have little recourse other than to cave in to whatever demands are made by the Penn Square Partners.

“Despite those efforts, center officials find they are dealing with higher-than-expected energy costs for the facility….”

The “higher energy costs” are in large part due to the foolish connection of the Marriott limited lobby area with multi-story break-out area for the Convention Center, thus requiring heating and air conditions to lobby temperature of an immense area during the majority of the time when it is not in use.   The basic design is simply nutty.   As for the rest, the arrangement with Penn Square Partners (of which LNP is a partner with High) concerning the Marriott Hotel tended to shift energy costs from the hotel public areas to the Center.  (Only one meter was installed despite separate ownership and shared space.)

“While the occupancy rate for Lancaster County hotel rooms was only 66.2 percent last month, Barrett cited a report showing that figure is higher than the rates for Branson, Mo., Williamsburg, Va., and Niagara Falls, N.Y.”

Note, they offer no industry statistics that would provide a valid measurement.  Instead they ‘cherry picked’ failing sites to make a comparison. Finding industry statistics is only a Google away!  Clearly accurate reporting  isn’t their intention.

“Yet the amount is far below projections. Late last year, industry experts told authority officials to expect an increase of 6.1 percent in tax revenue in 2011. Ten months into the year, the increase is tracking at .51 percent, Molloy said.”

The anticipated 5% increase in revenue actually went to pay the Room Sales Tax rather than to the hotels.    That is the reason why revenues did not increase the anticipated 5%.   The hoteliers and others tried to explain this but LNP and other proponents didn’t want to hear it.

Meanwhile lack of revenue is hamstringing the entire industry as it must put off renovations and upgrading for lack of profitability.   So what has been a very successful tourist industry is now in decline!

Article “Lancaster County Convention Center woes to trickle down” opens with three self exculpatory and self serving paragraphs and then ‘jumps’ to page A-5 to report the disaster that is about to befall the Lancaster County Tourist Center as its funding is allocated to paying Convention Center debt service.

Here is all the busy readers get to see on the front page:

“When proponents of a downtown convention center unveiled their plans in 1999, they projected 200,000 visitors would come to the city and county annually for events at the facility.

What they didn’t project was the center opening in the longest, toughest economic downturn in nearly a century.

Center managers have responded creatively by opening the two-plus-year-old center to volleyball and cheerleading tournaments, mixed-martial arts bouts and other events far beyond the corporate and trade association meetings originally envisioned.”

Note the artful fabrication of the third paragraph.  There is no reference to any Feasibility Study (there never was one until the PKF Report ) nor even to any of the Market Studies to make the point.  Instead the assumption is attributed to “proponents”. They must be referring to  S. Dale High and the Lancaster Newspapers, Inc. who ended up with a long term lease on the Marriott Hotel and ultimate right to purchase  it at a token price , mostly developed at taxpayers costs and risk and exempt from real estate taxes.

Does it matter that the Market Studies unanimously called for a more modest project and the PKF Report, ordered at the last minute by the Commissioners, ridiculed by the press, and ignored by the Lancaster County Convention Center board majority, foretold precisely what was to happen.

Not mentioned in the article is the historic low interest rates that have lightened the financing burden and helped offset any loss of business.

As for “What they didn’t project was the center opening in the longest, toughest economic downturn in nearly a century”, might we remind them of the Great Depression in the 1930s.

Let’s see what others say about the impact of the current steep recession on convention center business.

ConventionWord.net rports in “Top Ten Meeting Trends 2011” the following:  “Business travel (group and individual) is up in 2011 across Benchmark Hospitality’s portfolio. Booking pace for most properties is outperforming the previous year’s results. Customers remain highly rate conscious and value focused, though, and demand speed – as in fast Internet connectivity!”

It is a sad thing to see the Lancaster Newspapers, Inc. reverting to the same spin,  distortion and propaganda that brought the project into existence , overriding the accurate alarms expressed by then Commissioners Dick Shellenberger and Molly Henderson, by knowledgeable volunteers from the general public, and substantiated in the PKF Report.

When will the publisher and editors find the integrity and courage to admit they went astray and apologize to the public?

On November 29, 2011,  in an unpublicized meeting, Lancaster County Commissioner Scott Martin, Lancaster Mayor Rick Gray, Representatives from Wells Fargo Bank, Chris Barrett, Director of Pennsylvania Dutch Convention Visitors Bureau (PDCVB), Nevin D. Cooley, President of Penn Square Partners, Mark Moosic, of Interstate Hotels, the manager of both the hotel and convention center,  the Lancaster County solicitor, and a few members of the Lancaster County Convention Center Authority(LCCCA) board of directors convened at a commissoners’ conference room.

Only one county commissioner was in the conference room at the Duke Street County Courthouse, thus the meeting was not in violation of the state open meetings law, or Sunshine Act.

According to a source present at the meeting, who does not wish to be identified, the shortfall of approximately $800,000 per year is caused by two principal factors:  1) The annual expenses for the facility, projected to be about $1,000,000, are annually said to be upwards of $1,400,000.  The increase was attributed to a spike in energy costs, the source said; and 2) lower than projected hotel room tax revenue. $4,200,000 was projected, and  only $3,800,000 is coming to the LCCCA. This gap is expected to widen.

Alternatives are limited.  The 5% hotel room rental tax is actually two taxes; a 3.9% room rental tax and an 1.1% excise tax.  The LCCCA receives about 80% of the room tax; with the other 20 % going to the PDCVB.  The tourist bureau funds are supposed to be used to market the convention center.  So, by county ordinance, the LCCCA will likely first take the money currently going to the PDCVB.

But, according to the NewsLanc source, that still won’t cover the shortfall.  He said that a raising of the hotel room tax, or the imposition of another tax were also options.

A striking aspect of the current predicament is that in 2006, Lancaster County Commissioners Dick Shellenberger and Molly Henderson, who by then had been castigated mercilessly by sponsors Lancaster Newspapers, publicly went on the record predicting exactly an $800,000 shortfall.

Here is how the Shellenberger/Henderson prediction was reported in the Intelligencer Journal on September 27, 2006:

“Center won’t pay bills, county says   Charge: Borrowing plan will cause $800,000 annual shortfall
by: Dave Pidgeon Intelligencer Journal Staff

“Developers of a hotel/convention center won’t have enough revenue to cover its debt and operating expenses after it’s built, two Lancaster County commissioners opposed to the project said Tuesday. Commissioners Molly Henderson and Dick Shellenberger said project revenue for the Lancaster County Convention Center Authority would leave it at least $800,000 short every year.

“The problem is caused by the authority looking to borrow $14 million more than originally planned, they said, and could mean either tax hikes or stripping the Pennsylvania Dutch Convention & Visitors Bureau of money from the countywide hotel room rental tax to make up the shortfall. …”

“… To cover the estimated shortfall, the commissioners predict the authority would request any of three potentially contentious actions: Hiking the countywide hotel room rental tax from 3.9 percent to 5 percent. Tapping the county’s general fund. Stripping funding from the Pennsylvania Dutch Convention & Visitors Bureau, a marketing tool for county tourism including the proposed convention center, of its funding. The bureau receives 20 percent of the hotel tax, while the authority takes the other 80 percent. Under the 1999 county ordinance that created the tax, if the authority fails to meet its debt obligation, the entire hotel tax would go to the authority. As for hiking the hotel tax, Shellenberger said ‘Not under my watch.’” ….

If a tax hike is inevitable, it will happen under the “watch” of the current board of county commissioners.  And they have some explaining to do.  Each — Martin, Dennis Stuckey, and Craig Lehman — said during the 2007 county commissioners’ campaign – on tape – that they would not raise the hotel room tax.

The source said other meetings are scheduled with the other two county commissioners independently.