Over the Labor Day weekend, thousands of copies of an eight-page tabloid will be distributed around Lancaster, chiefly near the Central Market, downtown during First Friday, and outside Clipper Stadium.

Its headline:   “The Final Chapter in the Convention Center Series: Betrayals of Public Trust”.   The material is the fiftieth installment in a series concerning the Convention Center Project appearing at www.NewsLanc.com.

Despite review after review of the text, it was discovered only after printing that the title over the seventh page graphics reads “Estimated vs. Actual Costs of the Convention Center”    The word “Project” was unintentionally omitted at the end of the title.   It should read Estimated vs. Actual Costs of the Convention Center Project since the costs included both the convention center and the Marriott Hotel.

We apologize for the oversight.

Because of the vastness and complexity of the series, the periodic availability of both paid and volunteered authors, and other concerns, it was decided to publish the series in virtual ‘draft’ form with the intention, time and resources becoming available, to later condense, supplement and polish a book version.  A later draft is in the works and revised chapters will be substituted as they become available.

As stated in the tabloid’s introduction, “…local circumstances have in general changed for the better.” Nevertheless, the after effects of this disreputable episode in Lancaster’s history have been and continue to be felt, most recently with the need of the Convention Center Authority to borrow funds to cover its debt service and to accede to the refinancing requirements of the bond guarantor.     Not only have other opportunities for needed public undertakings been lost due to the concentration of tax dollars in this questionable downtown project, but it may soon be necessary for the county commissioners to increase the hotel room sales tax to cover deficits, which will further hobble the county’s former flourishing tourist industry.

Although the problems of greed and special interests may be far worse elsewhere, nevertheless we must have the courage to speak out here in Lancaster to preserve and, where need be, to restore the integrity of our institutions and a civil society.

EDITOR’S NOTE: There were so many revelations at the Thursday meeting of the Lancaster County Convention Center Authority that we can only do justice through a series on the incredible revelations.

The sponsors of the Convention Center anticipated an annual increase in the Hotel Room Rental Tax that had been imposed to subsidize the problem.  In fact, revenue from the tax has remained flat over the past few years, despite the addition of hotel rooms including the approximately 300 room downtown Marriott Hotel.

Less room tax collected means less subsidy, and this is one of the factors that caused the Convention Center Authority to increase financing on the project in order to meet its debt service obligation.  Furthermore, the dour financial prospect forced the Authority to accept draconian fees and terms from Wells-Fargo as part of reconstructing in order to avoid even worse consequences were the Wells Fargo guarantee of the convention center bonds expired on March 1, 2012, triggering a default rate of the bank’s prime interest rate plus 3%, an absolutely usurious figure.   (We can thank project sponsors, their attorneys, and the City dominated majority board members for agreeing to such a preposterous default rate in order to secure the guarantee which no other bank or financial institution was willing to provide.)

Peter Chiccarine is a part owner and the operator of the Best Western Eden Resort and the Fulton Steamboart hotel.   The Eden Resort is one of the most attractive, best run hotels in Pennsylvania and has earned the rare accolade of being designated a “Premier” Best Western, one of the best in the system.   Chiccarine spoke from the audience at the meeting to help explain why, in general, the hospitality business is floundering in Lancaster County.

(Note: The following quotes are based on rapid lap top note taking and may at times be paraphrasing.)

He said the hotels were facing both a “rate problem and an occupancy problem.”

He indicated “It is an occupancy problem first.  Hotel and bed and breakfast operators are very concerned about occupancy and they therefore do the only thing they think they can do is to lower rates.  And that isn’t what we should be doing.” He says this is the first time in years that he has seen   “$49 rates along Rt. 30 in August.”

He  went on “Demand [for rooms] is there, but it is spread out over a lot more properties.   A lot of new product is on the market and that should raise the average rates since they tend to charge more.  Some have closed which should be helping.  We just don’t have enough demand.  We need to figure out what to do to generate more demand.   This has been trending this way for a number of years.   Occupancy is terrible when you look back ten years.”

Chiccarine continues:  “How do we create more demand?   STR [a hotel industry survey report] believes we can get a higher average rate.   Eden and Fulton have rate increases higher than average market.   Are we differentiating ourselves here in this market?  We need to address this.  We are concerned about what will happen next May and August.”

Then he dropped the bomb:   “What is tarnishing the image of the county is the quality of the product.   I can list 20—probably 40 properties – that have not put sufficient funds back into the product.   Read reviews on Trip Advisor and you can’t get past twenty hotels with an approval rating above 50%.”

He continued “What starts this is occupancy starts to decline. Individual operators cannot control occupancy by themselves.  We need efforts by the tourist bureau and the LCCCA.  We have lost our focus entirely. We are not focused on the right market.   So other places not far from us begin to take that business away from us.”

He concluded:  “This economy should benefit us, not harm us.   It should be helping us since people are not going as much to Europe.”

What Chiccarine did not go on to explain was the major reason why most local hotels have not been investing in upgrading their facilities and thus are disappointing guests and blighting the previous positive image of Lancaster as a tourist attraction.   They don’t have the earnings to invest!

Those who promulgated the Room Rental Tax would have us believe it does not affect local businesses, but only out of town guests.  This is a blatant untruth.  If the hoteliers could charge 5% more without losing business, they would do so without anyone needing to increase their costs with a tax!  This is just common sense.

Furthermore, the Watchdog can attest that when Room Rental Taxes were imposed on his firm’s Wilkes-Barre and Newark, NJ hotels, earnings fell the next year virtually dollar for dollar!

Consider that hoteliers don’t even earn 5% profit from revenue after debt service.   So if a large part of their profit is taxed way, how are they to have funds to invest or the capacity to borrow?  Thus Chiccarine observation that the quality of the majority of local hotels and motels has seriously declined and that tourists are now choosing different regional destinations.

But the sorry ramifications go further.  When rates and occupancy fall (remember there are more rooms added each year), one of the primary places to cut expenses is in wages since the hotel industry is highly labor intensive.  This means that workers not only do not get wage increases, but those earning more than new comers are often replaced.   So a $9 an hour employee replaces the $11 an hour desk clerk or maid.    And benefits are slashed or removed altogether.   This is not only tragic for the worker’s family, but means greater strain on the regions social safety network…and yes, likely more taxes on the general population and / or cut back on other essential services such as the libraries.

The $186 million plum of the convention center project meant multi-million dollars of profits for contractors, managers, consultants, law firms and ultimately  likely Penn Square Partners,  mostly paid for through public funds and loan guarantees.  Even worse, it is a source of blight for what used to be one of Lancaster’s most dynamic industries.

To be continued…

It was one of the most extraordinary public meetings in the Watchdog’s long memory…anywhere.   The purpose was to hurriedly approve the restructuring of the Convention Center debt and additional borrowing of $750,000 through an arrangement with Wells Fargo to purchase all outstanding bonds and become the bond owner rather than the bond guarantor.

Wells Fargo is the successor to the Wachovia Bank which had guaranteed the issuance of ‘low floater, tax exempt’ bonds through a Letter of Credit not very long before the banks rapid financial decline and ‘shot gun’ marriage to Wells Fargo.  The term of their guarantee was five years and the reason given for immediate approval of the restructuring was a September 1st  deadline for important Authority action, although the guarantee remains in place until March, 2012.

The high price this is costing the LCCCA; its need to postpone a payment of principle under its current loan agreement;  the unusual short term of 18 months of the loan agreement extensions; the financial condition of the convention center; the implications for the future; the flatness of revenues from the county hotel room sales tax and causes; the ‘usurious’ default rate  (prime plus three -on tax exempt financing)  facing the Authority if restructuring did not take place;  the cavalier treatment of the Authority by Wells Fargo  both now and potentially repeatedly over the next thirty-five years …  all unfolded over the course of the hour and a half formal meeting and private discussions among board members and participants that followed.

Chairman Kevin Fry was generous in allowing members of the audience to participate in the discussions, even allowing them to question and engage in dialogues with board financial consultant Thomas K. Beckett, Jr.   Beckett had also been the adviser on the initial financing of the convention center.

Audience members were few but those participating were an informed and outspoken group:  Randy Carney, perhaps the foremost scholar of the convention center project; Peter Chiccarine, a principle in the Eden Resort and Fulton Steamboat hotels; Steven J. Geisenberger, CPA, CVA who has advised the financial committee; and Robert Field, a. k. a. the Watchdog, an investor builder and also the publisher of NewsLanc.

Covering the event for the Lancaster Newspapers, Inc.  was Bernard Harris, who appeared to be trying to avoid noticing the highly newsworthy information being exchanged among participants in his presence.

Field told Harris that NewsLanc was going to hold off writing its full report of the revelations until after the Intelligencer Journal / New Era had an opportunity to publish its article.   The public can measure how far the Lancaster Newspapers, Inc. has recovered from its past biases and lapses by how candidly it reports on revelations of the meeting.

This is the fifty-first and last installment in a series concerning the Convention Center Project.

Its purpose is to summarize the questionable, devious, sleights of hand, and, at times, outright mendacious if not fraudulent actions of some of the participants.

Fortunately, local circumstances have in general changed for the better.  This is especially true concerning the Lancaster Newspapers, Inc.  which has returned to its  former high standards.

The editor thanks Chris Hart-Nibbrig, the principal author of the below and many of the installments, and others who choose not to be identified who contributed and helped fact check.

Whether the Convention Center Project will be successful or a ‘white elephant’ is not central to the issues addressed.   Rather, the unscrupulous manner of how this huge and dubious undertaking came about is part of the history of our community, and future generations hopefully will benefit for its telling and lessons learned.

The Editor

Abuses by Lancaster Newspapers:

-  Lancaster Newspapers  (LNP) failed to disclose the extent of its ownership stake in the project – initially 44%  (and later 50%) –  until compelled to do so in court in 2006.

-  In an early 1999 LNP article introducing the possibility of a hotel room sales tax to subsidize the project, Rep. John Barley, Sen. Gibson Armstrong, County Commissioner, Terry Kauffman, and Lancaster Mayor Charlie Smithgall all said that the hospitality industry would have to support the idea for a room tax to finance the convention center.  In the summer of 1999, before the vote to establish the hotel room tax and the LCCCA, the Lancaster County hotel and motel owners’ association conducted a survey regarding the project. Of 58 hotels and motels across the county, 54 voted against the project. Three abstained from voting; only High Hotels’ Hampton Inn voted in support of the project.

LNP  failed to follow-up and hold the public officials’ accountable for their initial statements.

-  Lancaster Newspapers repeatedly reported widespread public support for the project. To the contrary, a poll conducted for Fox 43 by Opinion Dynamics, a national polling firm, showed that 78% of the Lancaster public with an opinion opposed public financing of the project.   Lancaster Newspapers failed to publish the main findings of the Fox/Opinion Dynamics poll. Robert E. Field, publisher of NewsLanc, who underwrote the poll, paid for an advertisement in Lancaster Newspapers which reported the complete findings.

-  Despite ongoing references over the years by the newspapers to studies of project “feasibility”, none was undertaken until early 2006 when the Lancaster County Commissioners belatedly engaged industry leader, PKF.

-LNP ‘cherry picked’ data from the market studies, ignoring for the most part their negative observations.   The Ernst & Young market study, for example, lists “Factors Assessed as Competitive Weaknesses: 1) Air Access; 2) Cultural, arts and entertainment attractions; 3) Population; 4) Industry concentration; 5) Historical demand for lodging/meeting facilities; 6) Market image for meetings/conventions/trade consumer shows; 7) Other quality-of-life issue.” With findings of few cultural attractions, no air service, and congested traffic, the market studies were hardly recommendations for the project. However, to read the Lancaster Newspapers’ articles, the studies painted a picture of probable success.

-  LNP  uncritically published misinformation by representatives of Penn Square Partners and other project proponents.

-  LNP allowed – unchecked — the public denigration of the PKF report by project sponsors.

-  After promising to release the Ernst & Young report to hotel and motel owners in July, 1999, the sponsoring organization, Lancaster Campaign, reneged on that promise and didn’t release it until the commissioners voted on the tax in early September.  LNP did not hold the pro-project commissioners accountable for the withholding of vital information.

-  Lancaster Newspapers reported that organizations including the Lancaster Campaign, Lancaster Alliance, Economic Development Company of Lancaster (EDC), Lancaster Chamber of Commerce all supported the project, without pointing out that the boards of directors of these organizations either included the private partners, or were working for them.   Examples include the Lancaster Alliance and Lancaster Campaign, organizations launched by High, Buckwalter and Fulton, and a small handful of their business associates. The Lancaster Chamber of Commerce was headed by Tom Baldridge, also executive director of the Lancaster Campaign. Jack Buckwalter and Rufus Fulton sat on the EDC board. The failure to disclose the interlocking directorates gave the false impression that the project had wider organizational support than it actually did.

-  After the first round of construction bids were returned in May of 2006, Lancaster Newspapers reported a $13.6 million cost overage.  In fact, it was more than $25 million.  It took a member of the convention authority board, Laura Douglas, to point out the discrepancy.

-  Lancaster Newspapers failed to report that the twenty-plus million dollar budget closure in the summer of 2006 was largely illusory and in part fallacious, and that some of the funds came at the direct expense of other, arguably more worthwhile projects, such as  the downtown Lancaster Public Library, thus halting plans for its expansion and renovation.

-  The sale of Conestoga View Nursing Home was used to smear the two county commissioners who were critical of county guaranties of convention center funding. LNP  repeatedly treated the lawful selling of a money-losing county asset as being the height of folly.

-  LNP stood by uncritically while District Attorney convened an unprecedented Grand Jury to investigate the hiring of a county employee and kept it in session frantically searching for any wrong doing for almost a year.  (The only two prior grand juries in Lancaster County history were convened for murder cases.)

-  LNP for three days straight reported a plea bargain by the commissioners for a minor violation of the Sunshine Law as though it were the crime of the century.  The real story that went unreported was how the Grand Jury had continuously rebuffed efforts by District Attorney  DonaldTotaro to find any wrongdoing.  The Grand Jury’s final report found no violations whatsoever of any laws.

-  Unlike their usual practice of having the Intelligencer Journal take one side of an important issue and the New Era the other, all three newspapers actively supported the project both in their news and editorial coverage.

-  LNP used its press to demonize opponents of the project, consistently using terms like “naysayers” and people who wanted to “kill” the project, or suggesting trumped up self interests on the part of critics.

- In a front page article published in the Intelligencer Journal, December 17, 2004, Lancaster Newspapers reported in detail a proposed RACL purchase of the former Watt & Shand building.  Three months later, after Penn Square Partners tax abatement plan was rejected by the Lancaster School Board, and after Dale High pronounced the project ‘dead,’ Lancaster Newspapers reported a “new” plan for RACL to purchase the Watt & Shand building.  The “new” plan was a mirror of the RACL deal of December, 2004.  In private discussions before the School Board vote, city officials used the RACL deal as leverage in trying to persuade school board members to vote for their tax plan.

- There was ‘off’ and ‘on’ reporting concerning the likelihood of the project prior to and during the biddings of the construction project.   Did the news reports discourage bidding by other contractors, and thus benefit winning bidder, High Construction Company?

Abuses and self serving by Penn Square Partners and its General Partner High Associates

S. Dale High is the county’s most prominent businessman, heading High Industries Inc. and High Real Estate Group LLC among other High entities, and he is, directly or indirectly, a major contributor to political parties, and also a strategic and highly publicized donor to charitable causes.  As such, High could be characterized as the ‘boss of bosses’ in Lancaster County.

- In the case of the convention center project, High used his connections and status to leverage public officials, LNP, and governmental bodies to provide extraordinary benefits in guarantees, financing, waiver of fees, free city services, exemption from real estate taxes, and unusually favorable contract terms for Penn Square Partners (PSP)  with the Lancaster County Convention Center Authority (LCCCA).

-  High’s registered lobbyist, the law firm of Stevens & Lee, was named solicitor to the Lancaster County Convention Center Authority, thus creating an arguable conflict of interest by representing both the private and public sectors of the project.

-  Several High subsidiary companies received single bid contracts for the project, including the largest “General Trades” contract, of more than $37 million. When High resigned as construction  manager and announced that that his subsidiary would bid in the second round, the prior bidder, Wohlsen Construction, withdrew.  Wohlsen’s earlier  bid was reportedly $15 million lower!

-  A High Group subsidiary was awarded the food concessions contract at the convention center, and was only required to pay a minimal 5% of revenue up to a threshold figure, and 10% commission thereafter, rather than standard industry commissions ranging from 20% to more than 30%.

-  PSP, despite initial claims of a $45 million investment, only contributed upfront $11 million, in a form that remains unclear, towards the $72 million plus cost of the hotel. The rest of the funding was taxpayer dollars combined with a $24 million, 20-year construction mortgage guaranteed by the City of Lancaster (bringing the PSP’s total “investment” through bond payments to $35 million over 20+ years).  PSP has an option to acquire the hotel after 20 years for a nominal amount.

- Through a sale and lease-purchase arrangement with RACL, PSP was able to avoid the payment of all county, school district and city real estate taxes, costing the city, School District of Lancaster, and the county millions of dollars in lost real estate tax revenue over the 20 year term of the agreement.

-  Despite being only an investor in the Marriott Hotel business, PSP demanded in the project’s agreements half of any additional funds contributed by the state to the convention center portion of the project.

-  In the agreements negotiated on behalf of the LCCCA by Stevens & Lee, PSP is to receive 50% of the proceeds from naming rights to the convention center, even though its investment is strictly in the hotel. Because of this, later LCCCA boards have taken no action toward selling these valuable naming rights.

-  This same agreement specifies that S. Dale High – named individually – would have “Right of First Offer” to acquiring the naming rights to the convention center, a provision that would discourage other bidders.

-  On more than a half-dozen occasions, Dale High threatened to ‘pull the plug’ on the project if he didn’t get his desired concessions.

-  After having been publicly exposed that the market studies made on behalf of the project were only market studies, High and PSP continued to mischaracterize them as feasibility studies.

-According to real estate investor Robert Field, Dale High told him face to face that PSP had a feasibility study for the hotel; they did not.  Also according to Field, High told him that High had assurances from other business leaders that they would move major facilities downtown once the project was under way; this did not occur.  (Perhaps so advised by High, Lancaster mayor Rick Gray repeatedly made the same kind of statements in front of the City Council board and in committee meetings.)

Excesses and abuses by Public Officials

-  Senator Gibson E. Armstrong: Armstrong amended state law several times to benefit the project. The first time, in October, 1999, he clandestinely changed the Convention Center Authority Act by amending a small section and inserting it into another, unrelated, bill. Armstrong was criticized by several members of the Lancaster legislative delegation for the move.

.   “Act 23” is a state law repurposed and rewritten by Armstrong specifically to provide construction funding for the hotel tower.  Armstrong later pushed through amendments to this law in order to block pending lawsuits.   Under the provisions of this law, more than $14.5 million was borrowed from Fulton Bank, to be repaid by State grants of $1 million a year over a 20-year period.  These grants are justified under “Act 23” by increased sales tax, hotel tax, and personal income tax generated by the project.  If the total of these were to fall below $1 million a year, the City of Lancaster is responsible for paying the difference.  Tax forgiveness and state subsidies for the Convention Center Project means higher taxes in general and / or less support for worthier undertakings.

-The ‘heroic’ legislation by Armstrong directly or indirectly cost Lancastrians millions in tax revenues, potentially millions more as a result of bond guarantees, and funding for other worthy  local causes and projects, such as the aborted expansion and renovation of the Lancaster Public Library resulting from promised funds being transferred to cover Convention Center costs.   It also burdened the tourist industries with a 5% room sales tax

-Sen. Armstrong repeatedly publicly denigrated Commissioner Shellenberger, saying that his fellow Republican was a “liar,” and should resign. This added to the poisonous political climate in Lancaster.

-  Donald Totaro, District Attorney: Totaro, former Lancaster County District Attorney (now judge) petitioned the court to convene a secret grand jury to investigate the county commissioners over a county executive’s  resume discrepancy in late 2005. Totaro launched his grand jury investigation – sending out scores of subpoenas, before reading internal report on the matter. Grand Jury determined that while puffery took place with the resume, that the official application was accurate.

-The Grand Jury was only the third in Lancaster County history, and the other two were murder cases.

- It is extraordinary for a grand jury, especially one in session for almost a year, to come up with no indictment.

Brandishing the threat of indictment over the three county commissioners, Totaro presented them with a Hobson’s choice: either possibly be indicted (for reasons not disclosed and a mystery to them), or plead ‘guilty’ to a summary violation of the Sunshine Act for which there was a $100 fine.   Totaro knew that the Grand Jury had found no evidence of wrong doing by the commissioners, as became evident when their report was made public.  (Individual commissioners could not know what wrong doings might have been done by another and feared implication.   There also was the need to put the matter behind them prior to running for re-election.)

-  Louis Farina: President judge. Farina gave the official go-ahead for Totaro to open his Grand Jury investigation, and empanelled only the third grand jury in Lancaster County history – the others were for murder cases.   Moreover, Farina allowed Totaro to flit from new allegation to new allegation, all of which were found to be without merit by the Grand Jury.

-  Paul Thibault, Lancaster County Commissioner (Chairman): Backed by High, Buckwalter, and Fulton’s Lancaster Alliance, Thibault as commissioner led the passage of the room tax, and established the LCCCA board in 1999.  Four years later, as a lame duck commissioner, less than a week before the general election to select his replacement, he tied the hands of the next board by passing a $40 million county-backed bond guarantee for the project.  So long as debt remained on that bond, nothing could be done by future commissioners reduce or repeal the hotel room sales tax.

-  Terry Kauffman, Lancaster County Commissioner: Kauffman, a Republican who left office in 1999, voted to impose the hotel room sales tax and establish the Convention Center Authority despite a critical Ernst & Young market report and concerns expressed by hoteliers and  the public.  Kauffman publicly said he was basing his vote on the Ernst & Young “feasibility” study.

-  Rick Gray, Mayor of Lancaster: As a candidate for Mayor of Lancaster, Gray promised that he would convene a study group to investigate the feasibility of the proposed center.   After the election, Gray’s ‘panel’ questioned only people who were intimately involved in the project, and no one else.  The day after Gray’s inauguration as Mayor, he viciously attacked those who were asking questions about the project at a public forum held at Farm & Home Center.  There, Gray’s statement that state money should not be passed up suggested he either had been a supporter of the project or was unwilling to clash with the convention center sponsors.  Later, after impulsively suggesting a feasibility study be sponsored by the Commissioners, he back peddled on his request and subsequently publicly trashed the reputable PKF feasibility study.

-  Arthur E. Morris, former Lancaster city mayor and Sunday News columnist. Morris, more than anyone, kept the Conestoga View issue in the press with a fusillade of criticism for the county commissioners.  His concerns about the future of the facility in private hands did not come to pass; instead, Conestoga View was able to maintain, and even improve, the quality of their services.

-  Dick Shellenberger, County Commission Chair: He erred and later publicly apologized for not allowing more time than was required for public comment on the sale of Conestoga View Nursing Home.  He had campaigned for office as a conservative Republican and had espoused privatization of government functions where possible, a position consistent with that of then president George W. Bush and other Republican leaders.  Although overwhelmingly elected, his courageous position of questioning and later opposing the county guarantee of convention center debt caused him to be hounded from office by center supporters and the Lancaster newspapers.

Abuse by Lancaster County Convention Center Authority (LCCCA)

The Lancaster County Convention Center Authority was established in September, 1999, along with the imposition of a hotel room rental tax and an additional excise tax.  Eighty percent of the tax from the room rental tax goes to the LCCCA board to administer the project.

-  James Pickard, in his role as chairman of the LCCCA, represented in a $15 million application for state funds that the Pricewaterhouse market study “represents the market and economic feasibility of the project…”. This misrepresentation of a market study as a feasibility study came close to, if not actually being, either a misdemeanor or a felony.

-  Both chairman Pickard and his successor Ted Darcus refused to accept questions from the public nor would they allow public comment on matters before the authority board, other than setting aside a period at each meeting for public comment limited to three minutes per speaker.  Eventually, a successful law suit brought by a community activist forced the LCCCA to allow public comment on each item as it was.  Even so, Darcus as chairman consistently looked down at the podium and appeared to be reading or writing whenever a member of the public raised a pertinent issue.

-  Darcus deprived county appointed board members sufficient opportunity to review contracts with PSP by having them delivered only a little over a day beforehand and then refusing to postpone a vote to provide adequate time for review of the voluminous and one sided agreements prejudicial to the LCCCA’s and the public’s interests.

-  Darcus would not allow public review of even redacted Stevens and Lee invoices nor would he make them available locally for authority board members to peruse. Lamentably, this detracted the attention and energy of project critics from critical issues, since, when the invoices were allowed to be reviewed after the project was underway by then chair Art Morris, the invoices were found to be proper.

-  Almost a million dollars was paid to consultant Dan Logan without apparent work product.   Similarly, hundreds of thousands of taxpayer dollars were paid to other consultants, with inconsistent and often incomplete results.    It was Logan in his prior capacity of managing the Brunswick Hotel who had not returned calls to Mayor Charles Smithgall who at the time had wanted to explore placing the convention center next to the Brunswick in order to revitalize the hotel and Lancaster Square.

The LCCCA thwarted the County Commissioners by refusing to pay the balance of $18,000 on the $40 million bond which would have freed the Commissioners to reduce or repeal the hotel room sales tax.

-  Terms of agreements between the private partners and the public LCCCA redound overwhelmingly to Penn Square partners.  In addition to delivering voluminous documents to the board members in a little more than a day before a vote was taken,  then LCCCA board chairman Ted Darcus consistently did not arrange for the board to be briefed by counsel Stevens & Lee concerning these unusually one side arrangements

-  Although the hotel and convention center are owned by two separate distinct entities, the entire project is served by several electric meters which cover the “integrated facility” in ways that do not correspond to its division of ownership. Project architects told and reconfirmed to NewsLanc that the failure to meter separate use of the hotel and the convention center was at the instructions of PSP partners’ spokesman, Tom Smithgall of High Industries.  The architects later denied having said that.

Without separate metering of the hotel areas, the convention center areas, and shared space, it is not possible to accurately allocate costs.

-  The large break out areas in front of the convention center exhibition center is continuous with the lobby of the Marriott with no provision for isolating the areas. This wastes huge amounts of energy due to the high cost to continuously air condition the multi-story convention center break out areas to a temperature suitable for the hotel public areas.  A convention center is in use, at best, only half the days over the course of the year.

-  Parts of the building that are built and maintained by the LCCCA, such as the hotel kitchen, third floor ballroom and meeting rooms, fourth floor meeting rooms, half of the huge hotel lobby, and parts of the business office, are areas that Penn Square Partners’ will pay only a nominal $100 a year for 99 years to use.  All revenue received from any of these areas goes directly to the Penn Square Partners, even if the rest of the event is booked in the convention center’s facilities.

-  LCCCA sued county commissioners Shellenberger and Henderson in an attempt to prevent them from discussing the project publicly.

-  During the critical stages of sending out contracts, when county appointed board members objected to the short time for review of the documents and moved to postpone votes, they were overridden by the rubber-stamp, city-appointed majority.  At one LCCCA board meeting, former member Joe Morales harshly criticized board members for demanding enough time to study what they were to vote on, stating that he trusted the LCCCA’s solicitors (Stevens & Lee) to do what was right for the public.

-  The LCCCA paid millions of dollars to consultants, who left little work product to show for it. For example, Dan Logan (a former manager at the Brunswick Hotel) was paid almost $1 million for consulting work, with no evidence of his work product

-  Consultant Logan based his marketing strategy, he said at a LCCCA meeting in 2006, on a PricewaterhouseCoopers (PwC) market study. This study had been disavowed and withdrawn by PwC by the time of Logan’s comments

-  Several city appointed members of the LCCCA had little to zero experience either in the hospitality industry or in building large municipal projects.   They sat quietly at meeting and voted per chairman Darcus’ recommendations.

-  David Hixson was engaged as executive director despite a background almost exclusively in public relations, hardly any administrative experience, and no background in developing major projects.  Thus much of the planning and coordination of the project was performed by the law firm of Stevens & Lee at $250 to $300 per hour.

-  The LCCCA denounced the PKF Feasibility Report study even before it began, refused to cooperate with its research,  and went on to completely ignore its recommendations.

Abuse by Law firm of Stevens & Lee

Stevens & Lee authored the Third Class County Convention Center Authority Act, which permitted taxation of hotel and room rentals to pay for construction of publicly-owned convention centers, and established a convention center authority board to administer the project.   In 1999 when the convention center project was launched in Lancaster, Stevens & Lee represented Luzerne County and the Luzerne County Convention Authority, and Berks County and the Berks County Convention Center Authority.

- Conflicts of interests made Stevens & Lee improbable advisors to the LCCCA board members and likely contributed to the one-sided contracts with Penn Square Partners and High Industries. Note:

-  Stevens & Lee was the solicitor of record for the LCCCA.

-  At the same time, Stevens & Lee represented Lancaster County as its solicitor of record.

-  Stevens & Lee was also High Industries registered lobbyist in Harrisburg.

-  The first convention center offices were located within Stevens & Lee office space in the Fulton office building.

- Stevens & Lee collected more than $7 million in fees for work funneled from the LCCCA.

Abuse by Redevelopment Agency for the City of Lancaster

-  The RACL did not question its being used by former mayor Charlie Smithgall as a tool to allow Penn Square Partners to avoid paying real estate taxes on their ‘private’ hotel.

-  RACL officials refused to cooperate with the PKF feasibility study, commissioned by Lancaster County Commissioners.

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In the 1960s, downtown business people throughout the country recognized that their future was endangered due to the development of suburban shopping centers.  This was just a few years before the ‘coup de grace’ was administered through the development of malls that became virtual downtowns in themselves.   (Park City is the local example.)

Downtown Charleston, WV is served by three Interstate Highways, I-77, I-79 and I-63.  In the 1970s, they cleared out acres of older buildings between the highways and downtown and built their own mall, flanked with parking lots.  Hotels were built near the mall and highways rather than in the suburbs.   The downtown area a couple of blocks away suffered from the competition but did not die.

Downtown Lancaster doesn’t even have a limited access spur to connect to the Rt. 30 bypass and Rt. 222.   Thus it could not tap into suburban growth and most retail – including the short lived Hess Department store and Watt & Shand – had to try to survive on downtown and neighborhood traffic.

To this day, despite urgings of consultants for over half a century, north south through traffic travels  through the downtown area by local streets.  However, having preserved the character or downtown will prove to be key to a revitalized community.  By then downtown will be a gentrified community with retail serving the more upscale neighborhood and downtown workers.

The original concepts of putting a smaller convention center into a revitalized Brunswick Hotel and building a mixed use retail – condominium structure at the Watt and Shand site would have better provided for the center city of the future.

The Watchdog was interviewed last week by a veteran journalist who is writing a book which includes the history of The Lancaster Newspapers (LNP).

We believe he was surprised by our praise of the entity, the Steinman family and Steinman Trust for the quality of the newspapers and the generous contributions over a century to our community.

Yes, there was a decade during which they lapsed.  They allowed their business interests to compromise their journalistic standards. The first draft of the Convention Center series at NewsLanc.com describes much of what took place.   Hopefully our own book will follow.  

LNP started out by meaning well, they were duped, and, once made aware, they foolishly chose to perpetuate and compound their folly.  The leadership had lost its moral compass and disgraced itself.

That was then and now is now, although a sign of recognition by the LNP that they erred would go far in healing many wounds.  The Watchdog reads and enjoys the newspaper every day and holds the current editors and reporters in high regard.  Lancaster is fortunate to have such quality journalism.

By Christiaan Hart-Nibbrig

(Fiftieth in a series)

The phantom budget gap closure of 2006

“Reports of my death have been greatly exaggerated.” – Mark Twain

In an article published January 12, 2006, “Bids for center work come in low at disputed meeting,” the Intelligencer Journal reported:

“Bids to demolish and stabilize the site of a proposed hotel/convention center in downtown Lancaster apparently came in under budget, according to project developers.

“But at least three members of the public board overseeing the project said they were not informed of last week’s public meeting at which the bids reportedly were opened and discussed.”

On March 20, 2005, LCCCA chairman Ted Darcus announced at the board’s monthly meeting that it was seeking 19 construction contracts for the project. Board members Douglas, Hall, and Craver protested at the time about receiving documents related to bid process only days before the vote. “It’s more of ‘we’ll ram this through, regardless,” Deb Hall said to reporters.

Three weeks later, at its April board meeting, the LCCCA board tabled a motion introduced by Laura Douglas to cap spending on the project. Now, there were no effective spending constraints on the cost of building the, at least, $140 million project.

In the first week of May, 2005, demolition began on some of the buildings on the projected site, including the landmark Oblender’s Furniture store. It came to light after several days that not only had demolition begun before the construction bids came in and financing completed, but that the contractor did not have a demolition permit to do the work.

“A contractor jumped the gun a little bit,” chuckled Tom Smithgall, a High Associates Vice-President and spokesman for Penn Square Partners.

(Rick Atwater, a co-owner, of Oblender’s, who was pressured unwillingly to sell his family business wasn’t laughing. “I got a raw deal,” Atwater told NewsLanc. “It wasn’t right.”)

The LCCCA announced on May 7 that construction bids would be opened in two phases: smaller contracts on May 9; the rest, May 17. The reason for the delay, according to sponsors, was that contractors were said to need more time to study the project.

The May 9 construction bids unsealed by the LCCCA came to a total of thirteen bids, received for four contracts: pre-cast concrete, laundry service, food service, and fire protection. The low bids tallied about $55 million, leaving approximately $90 million for the remaining contracts to be opened on May 17, 2005.

Among the May 9 low bidders was High Construction, which bid the only proposal for pre-cast concrete, for $2,554,500.

Despite High Construction’s position as the “Construction Manager” for the project, PSP’s Tom Smithgall said the bid was not unethical or unlawful, even though High Construction is a subsidiary of High Associates.

“It’s a public bid process, and it should be open to everyone,” Tom Smithgall said at the time.

Along with High, others to receive contracts at the May 9 opening were:

• Ashland Equipment for the food service equipment contract; one of seven for the contract, $1,278,610.
• PAC Industries for the laundry services contract; only bidder, $393,675.
• King’s Fire Protection for the fire protection contract, four bidders, $1,197,800

The final phase of bid openings took place at the Southern Market Center on Vine Street on May 17. On that day, when the envelopes for the 13 remaining bid packages were opened, project sponsors were disappointed that the bids appeared to be $13.6 million over budget, bringing the construction budget to $102.6 million, instead of the projected $89 million, according to then-LCCCA executive director, David Hixon.

A week later, on May 24, it was reported by the Intelligencer Journal that the bids actually put the project $25.4 million over budget. The overage discrepancy was not discovered by a Lancaster Newspaper reporter, but by LCCCA board member, Laura Douglas, who brought it to the newspapers’ attention, but was not attributed in the article.

Commissioners Shellenberger and Henderson considered the huge deficit, and urged the sponsors to “throw in the towel.”

In the first week of June, 2005 the LCCCA decided to send out the May 17 contracts for re-bid, hoping to come closer to the $89 million target number. The Authority set July 27 as the date for opening the new bids.

Days later, on June 8, High Construction Company resigned as “Construction Manager” of the project in order to bid for the lucrative “General Trades” contract.

As Construction Manager of the project, High Real Estate was involved in establishing the bidding criteria with the project’s architects, Atlanta-based, Cooper-Carry, (chosen by Penn Square Partners).

On July 27, the last of the construction bids were opened, with High Construction – another subsidiary of the majority partner in PSP – the only bidder for the largest, “General Trades,” contract.

Combined with bids opened previously, the project found itself again at least $20 million over budget. High’s bid alone was $15 million more than the previous General Trades bid from Wohlsen Construction, which bid $22 million on May 17, but did not re-bid the project in July.

Again, as it did on earlier occasions, Penn Square Partners immediately implied the death of the project.

“Bids doom center plans: Penn Square Partners says $20 million ‘gap too great,” lamented Lancaster Newspapers in its front page headline.

“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,” said PSP spokesman Tom Smithgall.

“It’s a sad day,” said John M. Buckwalter, chairman of Lancaster Newspapers. “One could say we are still going to try, but it is very unlikely at this juncture,”

Even the Intelligencer Journal, through veteran columnist, Jeff Hawkes, pronounced last rites over the project. “The project is too controversial and divisive to go forward,” Hawkes, a project supporter wrote. “This project is in need of a mercy killing. “

With a nod to Mark Twain, reports of the convention center project’s demise were greatly exaggerated… once again.

The very next day, July 28, 2005, the project, after being pronounced dead, Lancaster Newspapers blared an optimistic headline: “The search for $20M: Can they beat the clock? A wide array of officials scrambles [sic] to make bid deadline in effort to rescue Penn Square project.”

The article reported that Lancaster Mayor, Rick Gray, had called a meeting of “local and state officials” to try to find ways to fill the $20+ million hole. The ‘clock’ referred to a deadline of August 15 to approve contracts, or the bid proposals would expire.

State Representative Mike Sturla was at the July 28 meeting, and said to the Lancaster New Era. “Telephone calls are flying back and forth by the hour. Schedules are out the window. We’re searching everywhere for the money.”

Two weeks later, on August 11, 2005, Lancasterians picked up their morning Intelligencer Journal and saw, in headlines usually reserved for the beginnings or ends of major wars, that the $20 million budget overage had been met.

“CENTER CLOSES FUND GAP: DEVELOPERS TO INCREASE THEIR STAKE”

Hallelujah!

In keeping with the life-or-death imagery favored by project sponsors, Intell reporter Dave Pidgeon begins the article of resurrection:

“Lancaster city Mayor Rick Gray announced a plan Thursday to keep alive a hotel/convention center project by plugging a $20 million funding gap.” ( Was there a significance that Gray was chosen to make the announcement rather than a representative of Penn Square Partners lest there later be charges of fraud?)

According to the Intell and the New Era, the “plan” was to fill the $20 million hole by:

• Lancaster Newspapers using $7 million of its own money to build a parking garage, plus loaning the Lancaster Parking Authority $3 million in an “interest-free” loan.
• Penn Square Partners investing another $1million
• Charging $2 million for “Naming Rights” to the center
• Shaving off $5.25 million for ‘Value-engineering”
• The Historic Preservation Trust will give $3 million it purchases historic easements
• Saving $1.5 million from favorable interest rates from a $14 million construction bond to be floated by RACL. The RACL bond is backed by $1.1 in state grants.

The “plan” announced by the Mayor was immediately derided by project opponents.

Commissioner Dick Shellenberger said, “It’s not right to count the garage as savings when it wasn’t in there in the first place.”

Lancaster First, an organization of few dozen citizens watch-dogging the project, said in a public statement at the time that the plan was “Smoke and mirrors:..

“1) The $7 million in savings from the parking garage, now to be funded by Lancaster Newspapers, Inc., was never part of the original budget, and therefore can’t be counted as reducing the deficit.

2) The $3 million pledged by the Historic Preservation Trust is raiding the money allocated to create an educational museum.

3) The $5.25 million in ‘value engineering’ – which has been undertaken several times before – can only result in a substandard facility which will lack aesthetic and result in much higher operating and maintenance expenses.”

In addition:

4)  The $2 million for the “naming rights” was sheer conjecture and, to date, not a cent has been achieved, perhaps in part because of the contract by which S. Dale High as an individual is given certain naming rights preferences.

5)  The second round of “value engineering”, which can better be described as dismemberment, likely resulted in the missing escalators between the convention center and the Marriott lobby, the gutting of the electric system so that the entire project is only served a single meter without the benefit of sub-meters to separate cost of operations of the two facilities and measure efficiency, possibly the reduction in air condition capacity, and the choice of floor finish in the Marriott’s restaurant.

Not mentioned by sponsors or the Lancaster Newspapers was the re-allocation of $3 million earmarked for the renovation and expansion of the Lancaster Public Library in order to partially cover cost overruns of the convention center project.  The funds were pivotal for the library project to move ahead.   Strenuous efforts by staff and volunteers for over a year and plans costing $400,000 went for naught.  Over fifteen hundred Lancastrians visit the outdated and worn Duke Street facility that has not had a major upgrade since the1950s.  How many Lancastrians visit the Convention Center each day?

With the majority rubber stamp awaiting them at the LCCCA, the sponsors knew that this battle, perhaps the crucial one in the war, was over. And they won through sleight of hand . . . again.

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Chapter Fifty-One: Final chapter in Convention Center Series: Betrayals of public trust

EDITOR’S NOTE: This is a re-write of the thirty-third in the series.  It contains much more information and analysis.

(Forty-ninth  in a series)

By Christiaan Hart-Nibbrig

On December 17, 2004, on the front page, bylined by its lead convention center beat reporter, Dave Pidgeon, the Intelligencer Journal ran an article entitled: “City to Purchase Watt & Shand.”

In the article, Pidgeon quotes city officials and Penn Square Partners (PSP) president, Nevin Cooley, outlining in detail the Partners’ plan to sell the former Watt & Shand building to the city of Lancaster, through its Redevelopment Authority (RACL). By selling the building to RACL, leasing it back with a favorable option to buy in forty years, the Partners would remove it from the tax rolls (since a public entity would own it.)  Below are excerpts from the December 17, 2004, Intelligencer Journal article:

“According to the plan, Penn Square Partners would lease the hotel from the Redevelopment Authority while overseeing business operations of the upscale 300-room Marriot Hotel, proposed for a site next to the convention center.

“…After 20 years, Penn Square Partners, the Redevelopment Authority and the convention center authority would assume joint ownership and operation of the hotel.

“…If the Redevelopment Authority buys the properties, the city would receive a bond for $12 million – the projected income of sales taxes and personal income taxes over a 20-year period – via Act 23, Cooley said.

“… The Redevelopment Authority would then pursue a second bond worth $24 million, which local and regional banks have pledged to give it. Penn Square Partners would insure the bond, and the money would be used for construction.

“Each of the city’s debt payments toward its $36 million in bonds would be covered by Penn Square Partners hotel lease payments.”

Meanwhile, during the months of January, February, and the first weeks of March, 2005, the Partners and city officials, especially Mayor Charlie Smithgall, were aggressively pressuring the School District of Lancaster board members to pass a Tax Increment Financing (TIF) proposal that would take the building off the tax rolls, but would leave them with the title to the building.

A TIF is a designation that a particular area is “blighted” and, with the approval of the local school board, county commissioners, and city council, an applicant like PSP is qualified to pay an agreed upon amount to each of the three governmental bodies (the school board gets the biggest cut) in lieu of property taxes.  A TIF would also allow PSP to retain title ownership of the building.

Mike Winterstein, a member of the school board at the time, recalls the pressure put on his board to pass PSP’s TIF proposal, with the threat of no taxes if RACL owned the property versus some taxes if they approved the TIF.

During this period, Winterstein, recalls a conversation with Mayor Smithgall.  “Charlie was trying to get me to pass the TIF, but at one point he said, ‘Hey, if you don’t pass it the city will just buy the building and you will get nothing.’  It was like what we did didn’t matter.  They definitely had a “Plan B.’”

“They [Smithgall and Penn Square Partners] thought they could steamroller over us,” Winterstein told NewsLanc. “There was no doubt they thought we’d bow to their demands.”

Nevertheless, the school board, unlike the mayor, city council, and convention center authority board, rejected the Partners. In a stunning rebuke, the board, on March 15, 2005, voted 5-1 to turn down the Partners’ TIF proposal.

Here is where it gets strange.  Immediately after its defeat, the Partners and their prominent supporters, who had publicly given the impression that the TIF was absolutely vital to going forward with the project essentially, pronounced the project dead.

In their own words:

Nevin Cooley, President of Penn Square Partners:

“We made it clear that this is our best offer. There is nothing more that we can do. If I could have offered something different, I would have. …We can’t go forward and the community and the taxing authority will continue to have a building that is empty and deteriorating and not generating anything in new taxes.”

Senator Gib Armstrong:

“We made the best efforts we can. If the school board wants the downtown to sit the way it is, that’s their decision…If they want to keep the downtown like it is, fine. You can only do so much. It’s ironic that the people that would probably benefit the most – the school district – are the ones to kill it.”

Tom Baldridge, Chair of Lancaster Campaign, President of Lancaster Chamber of Commerce:

“I think this is a blow that will be particularly difficult to overcome.”

John M. Buckwalter, chairman of Lancaster Newspapers Inc., one of three companies which make up the Penn Square Partners:

“We are very disappointed. Over the past seven years, we have made our best efforts to bring the Watt & Shand building back to life. It appears that we cannot proceed under the conditions as set by the school board. So the project very well at this juncture could die.”

Ted Darcus, Chairman, Lancaster County Convention Center Authority

“They [school board] just killed this project.”

S. Dale High, CEO and President of High Industries, parent company of High Associates, General Partner of Penn Square Partners:

“We have listened, responded to and accommodated our community through the long seven-year period since we purchased the Watt & Shand Building, when no other buyer would have it.

Next, and most pointedly, he abruptly and unequivocally pulls out of the project. “We have stopped all work on our portion of this project, effective this morning,” he states.

High subsequently ordered the ‘Coming soon’ signs taken down from the former Watt & Shand building.

But what about the RACL purchase of the building, as previously reported on the front page of the Intel in December of 2004?

Here is where it gets even weirder.

After the school board rejected a ’sweetened’ TIF deal in late March, 2005, the Intelligencer Journal – the same Lancaster Newspaper that reported the earlier RACL buyout in December, 2004 – reported breathlessly on March 29, 2005, again on the front page, “City to buy W&S building: $6.8 million deal revives hotel plan”:

“Two state legislators [Rep. Mike Sturla and Sen. Armstrong] and city leaders spent Easter weekend forging the new plan, which they unveiled during a series of meetings Monday.

‘The entire project is too important to this city to let go,’ Lancaster Mayor Charlie Smithgall said. ‘I’m afraid someone (else) won’t do this project for another 10 years.’” [emphasis added]

Questions arise:

Question One:  What was the real purpose behind the Lancaster Newspapers publishing the December, 2004 article outlining the RACL purchase of the former Watt & Shand building?

Question Two:  Why did the sponsors — including Dale High — effectively pronounce the project dead after the TIF defeat, when they had already expressed support in December for the RACL buyout and used it privately as a caudle to sway school board members?

Question Three:  What made the Sponsors again reverse their direction and adopt the RACL plan, outlined in December?

Question Four:   Why did Lancaster Newspapers treat the March 28 plan as “new,” and just formed the previous weekend, when the details were published in its own paper just three months earlier?

NewsLanc, despite repeated attempts over the years, has not be able to receive comments from project sponsors to our questions.  So, after speaking with various sources, here is what we surmise from the puzzling series of events:

-   Lancaster Newspapers published the December, 2004 article as leverage for its lobbying efforts with the school board.

-     The Partners preferred the TIF over the RACL buyout, but could use RACL as a bludgeon to pressure the school board      into accepting its TIF proposal.  ‘Either take what we are offering, or we are going to take the RACL deal and you get nothing,’ is essentially the argument used by PSP to the school board.

-   High and his subordinates threw tantrums, and pronounced the project muerte, because he, and they, were rebuked.  High, the boss of bosses, was angry and personally affronted that the board rejected his proposal — after he made a personal and very public appeal to them — so he pitched a fit, took his ball, and went home.

-    High and the Partners changed their minds when they realized they still had an empty building, and had sunk several million dollars into architectural plans and other expenses related to it.  They decided to accept the RACL plan after all, which reimbursed every cent they had invested, gave them a cushy lease deal, and enabled them to own the building for a virtual song after the mortgage debt had been paid off.

-   The reason Lancaster Newspapers ran the March 28 article touting the miraculous last minute plan by Armstrong, Sturla, Smithgall and other sponsors was to allow the rich, powerful, and bruised, Dale High, who had publicly walked away from the project, to ’save face.’   High could re-coup his costs into the building, get hotel off the tax rolls, and still look like he was doing a mitzvah for his community.

Perhaps no other chapter in this long and often bizarre saga illustrates the sinister role the Lancaster Newspapers played.  Despite past decades of competent and solid local reporting serving its community (and also subsequent years), Lancaster Newspapers, undoubtedly influenced by its large stake in the project, used its immense power to propagandize and bias itself on behalf of the interests of the private sponsors of the project.

It is a stain on the proud Steinman name.  And it is a shame, not just for them but for the project and the greater Lancaster community.

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Chapter Fifty: Miracle on South Queen Street

by

Christiaan A. Hart Nibbrig

It was disappointing to learn that a Chester County judge threw out the libel lawsuit filed by former Lancaster County Commissioner, Molly Henderson, against Lancaster Newspapers, and former Lancaster mayor, Arthur E. Morris.

My perspective on the Henderson saga is one of an ‘insider.’ I worked for Commissioner Henderson as campaign manager during the 2007 primary and general election campaigns. The suit was not discussed with me during or after the campaign; the focus being getting the commissioner re-elected.

Prior to working on the Henderson campaign, I worked for NewsLanc.com, mainly focusing on the then-white hot issue of the building (and financing) of the convention center and hotel project. What NewsLanc reported at the time was that there were a myriad of apparent problems regarding the project; from its fundamental feasibility, to the public financing, to, yes, the media coverage emanating from Lancaster Newspapers.

As a fifty-percent shareholder in the hotel portion of the project (which is linked in many ways to the ‘public’ convention center), Lancaster Newspapers had a unique and very sensitive role in its construction.

Lancaster Newspapers’ role was also a very powerful one, due to its monopoly status within the county. In publishing the morning and afternoon dailies, and the only Sunday paper, Lancaster Newspapers was reaching virtually every household in the county at this critical time in the project’s construction. This meant that the only news on the hotel and convention center project that the average Lancaster Countian received came from one of the sponsors of the project. To maintain its credibility as a news source, it was important for the reporting to be beyond reproach. Unfortunately, it was not.

As a Columbia-trained journalist, with years of professional experience, I felt something was very wrong with the newspaper coverage of the commissioners, particularly as it concerned Commissioner Henderson, who questioned the project.

One aspect of the sub-standard reporting was the inexplicable omission of so many critical elements of the project. For example, the sponsors repeated, and it was reported many times, that “feasibility” studies were performed on the project, when, in fact, none had been. Minimally professional journalistic coverage would have revealed this mis-characterization, and reported it to the public. But Lancaster Newspapers’ reporters and their editors said nothing.

Another example of bias by omission was that Lancaster Newspapers represented, in its three editions, that the larger Lancaster County public was mostly supportive of the project. According to a Fox43-TV poll, conducted by Opinion Dynamics, a firm of national repute, the overwhelming number of the Lancaster County public (78%) with an opinion opposed the project if financing relied on taxpayer financing, which it did. It took the publisher of NewsLanc, Robert E. Field, to pay for an advertisement to report the poll findings to the public!

[There are, literally, dozens of omissions and misrepresentations in convention center newspaper reports. Go to NewsLanc archives to read coverage during this period.]

Another important aspect of the deficient newspaper coverage as it concerned Henderson was the ’saturation’ coverage of the Conestoga View issue. If the convention center issue was white hot; Conestoga View, to Lancaster Newspapers, was molten.

Day after day, month after month, from the summer of 2005 until the fall of 2007, usually on the front pages, above the fold, was some damning story about how “the commissioners” shadily sold the formerly county-owned nursing home, Conestoga View.

Lancaster Newspapers treated the legal sale of a county-owned asset like the bombing of Pearl Harbor. Often, pictures of “the commissioners” accompanied the highly critical front-page “articles.”

For about a year, the Sunday News even published a “countdown,” a weekly subtraction tally until the ends of Commissioner Henderson and Shellenberger’s terms. (The third commissioner, Pete Shaub, resigned before his term ended.) In my decades of reading periodicals of all shapes, sizes, and in many places, I have never personally seen a newspaper stoop to such a biased gimmick.

This was overkill. Conestoga View, as a story, where Commissioner Henderson was concerned, at most, amounted to a single, and trivial, Sunshine Act violation. It certainly did not merit the thousands of column inches that were devoted to it.

According to the Grand Jury report into Conestoga View, upon which so much of the reporting was based, Commissioner Henderson attended exactly one informational meeting that may (or not) have violated the letter of the Sunshine Act. Yet to read the newspaper reports, one would have thought Molly Henderson was a serial killer. This coverage was reprehensibly biased against her, in my opinion.

Lancaster Newspapers also continually depicted the board of commissioners as “dysfunctional” and inept. Before working for Henderson, as a reporter for NewsLanc, I attended virtually every weekly commissioners’ meeting, and not a single time did I observe Henderson (or Shellenberger) act in any way but professionally. Without exception, I saw Henderson work diligently on county business in a professional and competent manner. This was a challenge with the often erratic and flat-out weird Shaub flying off his hinges, and blindly attacking her and/or Shellenberger.

The meetings that I sat through every week, sometimes twice a week, were not the meetings I read about in the Lancaster Newspapers later that day or the next morning. In all frankness, I remember thinking at the time that the “reporters” – Jack Brubaker, Dave Pidgeon, Bernie Harris, PJ O’Reilly, Daniel Burke, Judy Strasbaugh – should have been embarrassed by those stories, so little did they represent what happened at these meetings. I would have flunked all of them in a high school journalism course for the terrible “reporting.”

It is my view that Lancaster Newspapers vilified Molly Henderson (and Dick Shellenberger) because she, by openly questioning the convention center and hotel, represented an existential threat to a project in which they stood to make many millions of dollars.

This is essentially what Molly Henderson was trying to prove in her lawsuit. That is very difficult to show.

At Columbia, my entire journalism class (about 125 students) was required to take a class at the Columbia Law School in the First Amendment. It was here, in a class co-taught by a leading First Amendment Columbia law professor and a Pulitzer Prize-winning journalist, that I learned the parameters of this Constitutional cornerstone of our national culture. I became aware of the limits, expanse, and majesty of this magnificent and inspired part of our country’s law. I also learned that while freedom of speech and press and religion were great, there were limits.

Molly Henderson had the difficult task of showing that the Lancaster Newspapers went beyond the vast limits of First Amendment protection. She had to prove, based on The New York Times vs Sullivan precedent of 1964, that Lancaster Newspapers published the ‘articles’ with “actual malice”; that is, she needed to show that Lancaster Newspapers either had “knowledge of falsity” or “reckless disregard for the truth” in publishing its stories.

By printing ‘back-of-the-book’ retractions and corrections, Lancaster Newspapers covered themselves from the “reckless” clause of Sullivan. And it is nearly impossible to show that, prior to filing their “articles,” Brubaker, Pidgeon, et al, knew what they were handing to their editors was “false.” That is a pretty high bar to clear.

Henderson’s case was always going to be challenging, if not nearly impossible to make. That is as it should be. She got an early victory by having the case reviewed in Chester County, rather than Lancaster County, an implicit acknowledgment by the Court that Lancaster wasn’t going to hear the case impartially.

But Molly Henderson should have had her day in a Chester County court. It was there that she could have brought out the stacks and stacks of newspapers, the ones that wrongly and unfairly depicted her as less than what she was – an honest public servant.

It was in the volume of the biased articles, not the six or seven with obvious, overt lies, where Molly Henderson was libeled. This was new ground for the courts, evidently, and they didn’t want to touch it.

I am saddened today, not only for Molly Henderson, whom I watched and worked around every day for a long time, but for my county and country. Molly Henderson was not a good commissioner; she was a great one. She had the courage and conscience that we, as Americans, say we want in a politician. I saw this up close, from the front row.

And she was burned at the stake by her community, led by her hometown newspaper, and now by the courts. She was wronged.

I want to say, on the record, that it was an honor to work for her, and it is blessing to consider her a friend.

The people behind the downtown Lancaster taxpayer-financed hotel and convention center project have been EXTREMELY aggressive in bringing business to their facility.  Consequently, the project has not yet “failed miserably”.

But it has indeed failed.

In 2010, the convention center LOST just over $1,400,000 taxpayer dollars to bring in more than $1,300,000 in revenue.  This might not be so bad if it would have created an even greater amount of economic development, but where is it?

Since the project’s construction bonds were sold in March of 2007, many more businesses have closed or moved out of downtown Lancaster than have opened. The only direct benefit to taxpayers has been the construction of a new Subway restaurant across King Street from the hotel.  Other businesses may have benefited in some ways from the project, however many downtown Lancaster merchants complain that their business drops off substantially whenever a sizable convention is in town.  And the first and second blocks of East King Street – in the shadow of the hotel tower – are still an economic disaster area, with more vacancies than occupied properties.

Meanwhile, the School District of Lancaster is facing ever increasing deficits.  Because the Penn Square Partners refuses to pay real estate taxes on their “private” hotel (with their building owned by Lancaster City), property owners in Lancaster City and Township are now paying more than they would be had the Penn Square Partners kept their word.

This project has clearly failed to keep its promises to local taxpayers.