CC Chapter Eighteen Revised: A New Mayor plays Hamlet

By Christiaan Hart-Nibbrig

Another issue crowding the convention center issue off the front pages in the latter part of 2005 was the Lancaster city mayoral race.

Running for a third term was bellicose, project-friendly, Mayor Charlie Smithgall. The democrats fielded J. Richard “Rick” Gray, a Lancaster attorney.

The incumbent Smithgall was arguably the project’s most fervent supporter. He picked the city’s LCCCA board members. He negotiated with Penn Square Partners since their formation in 1998. He and good buddy, Sen. Gib Armstrong, worked in tandem for the project. His hand-picked economic development director, Jim Pickard, was the LCCCA’s first chairman and executive director.

While uncertainty concerning the convention center project did not affect Smthgall’s support of it, it did seem to influence his Democrat opponent, Rick Gray.

Gray was a local defense and ACLU attorney with a reputation for representing the disreputable. The burly, goateed, bow-tied Gray seems to have endured a political Hamlet-esqe struggle on the public stage as it concerned the convention center project.

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

In September, 2005, two months before the election, Robert Field was invited to meet with Gray in response to a letter Field had sent him. Field and Gray had worked together on a public health issue.   According to Field, Gray indicated concern about the feasibility of the project. Field advised not opposing it, but to put some space between Gray and the project so that project opponents would be more likely to vote for Gray, and Gray would be more at liberty to research and decide when he took office.

The conversation between Gray and Field was reflected shortly after in a Lancaster New Era article, October 13, 2005:

“If elected mayor, Rick Gray said he would immediately meet with his top advisers to evaluate the viability of the downtown hotel and convention center.

” ‘Keeping the county commissioners’ concerns in mind,’ he told the Lancaster Rotary Club Wednesday, if he and his advisers decide it is not what the city needs, Gray said he’d ‘pull the plug’ on the $134 million project.”

On October 31st, Pat Brogan, Gray’s communications chief and spokesperson, wrote to Field:

If elected, Rick Gray will convene a group of objective individuals to discuss how this project can be moved forward in an expedited manner. If this group determines that the project cannot proceed on a timely basis, Mr. Gray [will] work with the group to develop an alternate plan.”

One month after winning his election against Smithgall, and just weeks prior to taking office, Rick Gray said again: “We’re taking a good look at the project right now with the idea of whether we can move it ahead or not.”

One day, in early December, 2005, Robert Field discovered that all of the studies commissioned by the project sponsors were delivered to his office. They had been sent anonymously.

Field took the studies home and read each of them. He was stunned.

I couldn’t believe it,” said Field. These weren’t feasibility studies. I had several feasibility studies done for hotels we built. The convention center studies contained none of the analysis one would find in a feasibility study.”

Field returned to his office and confirmed his impressions by reviewing the feasibility studies he commissioned, and comparing them to the convention center reports. Field realized that no true feasibility study was ever conducted for the mostly taxpayer-funded project.

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

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

In 2002, in a signed, official application for a $15 million state grant for the project, then-chairman and executive director of the LCCCA, James Pickard, referenced the Pricewaterhouse study, which, he wrote, reflected the “economic feasibility” of the project.

After reading the market studies, on December 15th, 2005, Field spoke on the telephone with Lancaster Newspapers chairman, Jack Buckwalter, and made Buckwalter aware of his findings and urged him to undertake an actual feasibility study.

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

Kenney concluded that none of the reports were feasibility studies, but rather the more narrowly focused and less comprehensive marketing studies.

Kenney’s report is dated December 22nd, 2005:

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

In a later interview, Kenney spoke about the two types of studies.

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

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

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

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

Field personally went before both the County Commissioners and the LCCCA board to argue for a feasibility study.

“I suggest that the Commissioners call on the County, the City, and the Convention Center Authority to jointly commission a genuine feasibility study of the Convention Center/Hotel Project by an established reputable firm specializing in such matters,” Field said to both boards in prepared remarks.

On January 4th, 2006, one day after taking his oath of office, Lancaster Mayor Rick Gray strode into the Farm & Home Center, a large meeting hall just outside of Lancaster city.

The new mayor was about to make his position on the convention center issue crystal clear.

A public meeting was taking place inside the Farm & Home Center. The meeting was called by the three new county LCCCA appointees – Douglas, Hall, and Craver – to hear from the public on the convention center-hotel project. Though invited, none of the city appointees were present, nor was Executive Director, Dave Hixson, or LCCCA solicitor, John Espenshade.

The room was filled with more than two hundred citizens. Most opposed the project.

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

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

The crowd was stunned. A few clapped. Some booed. Most were quiet. Then Gray turned and rolled out of the room.

It was a hell of a performance.

But this was not the end of the new mayor’s vacillations.

Exactly one week after his Farm & Home Center appearance on January 11th, Mayor Rick Gray crashed the County Commissioners meeting.

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

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

Within 90 minutes of Gray’s offer, Robert Field was briefed about it from this writer, (who was covering the commissioners’ meeting for NewsLanc.com, which Field had recently launched). Field immediately spun around in his chair in his office, turned to his computer, and wrote a joint letter to Shellenberger and Gray (copying all three Lancaster newspapers) saying he would subsidize the cost of the feasibility study in the amount of $50,000.

Field wrote:

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

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

Mayor Gray seemed to back away from his call for a feasibility study almost immediately. When Commissioner Shellenberger announced on January 14th that a firm other than Pricewaterhouse should perform the study, Gray blasted Shellenberger calling the change “wasteful” and “unnecessary.”

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

But Gray still objected. In addition to demanding Pricewaterhouse conduct the study, and imposing a hard 60 day deadline from January, 11th, 2006, Gray, in a letter to Shellenberger dated January 20th, insisted Pricewaterhouse “evaluate the changed project on the same basis as the earlier project was evaluated.”

The last stipulation would ensure that a market – not a feasibility — study would be performed. The term “feasibility study” was not mentioned in Gray’s letter to Shellenberger.

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

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

Commissioners Shellenberger and Henderson were receiving pressure over who should conduct the study. And they were politically ‘gun-shy’, at this point. The Commissioners, in February 2006, were significantly damaged by the extensive, six months of Conestoga View and now grand jury coverage in Lancaster newspapers.

Robert Field believed strongly that the international hospitality consultancy of PKF  (formerly Pannell, Kerr, Forste) should be selected to perform the feasibility study.

“It is vital that a top firm conduct the study,” said Field. “It has to be a firm whose credentials and reputation cannot be questioned. PKF is one of the few who meet the highest standard.”

The Uptown Economic Development Corporation (UEDC), an organization comprised primarily of local black business, religious, and community leaders, lobbied for another firm to conduct the study.

In a letter to Commissioner Shellenberger dated January 19th, 2006, Rev. Roland Forbes, chairman of the UEDC, wrote:

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

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

What happened next was a strenuous debate among  Shellenberger, Henderson, and Robert Field. The Commissioners spoke individually and separately with Field regarding which firm should perform the study.

After sending out requests-for-proposals, the Commissioners eventually selected PKF. On February 16th, 2006, Commissioners Shellenberger and Henderson voted to hire PKF to perform the feasibility study (Shaub dissented.) The cost: $115,000.

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

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

Finally, it would be determined if the project was even feasible.

XXX

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Updated: March 19, 2013 — 11:25 am
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