CC series Chapter Three Revised: Helping hands in Harrisburg

by Christiaan Hart-Nibbrig

Two days after Penn Square Partners signed the papers to acquire the Watt & Shand building from the Bon Ton company,  Bert Winterbottom presented his report to the people of Lancaster.

A well-promoted public meeting was held on February 19, 1998, at the Armstrong World Industries headquarters on Liberty Street in Lancaster.  Armstrong CEO and Lancaster Alliance chairman, William Adams, emceed the event and introduced Winterbottom.  It was the Lancaster Alliance subsidiary, the Lancaster Campaign, that commissioned the Winterbottom study

According to the Intellegencer Journal, “hundreds” of people attended the meeting.

Winterbottom and his colleagues from LDR International had taken several months to perform their research.  In the process, they held public meetings, conducted polls and surveys, and came up with a well-publicized report, finished in January, and now presented to the Lancaster County citizenry on this February evening.

The report was expansive in scope.  It was a plan that addressed issues like streetscape enhancements, urban landscaping, lane and alley rehabilitation, sidewalk and public park improvement, new lighting, and street furnishings.

The Winterbottom study focused on the revitalization of three separate sections of the city: Downtown (Lancaster Square & Penn Square); North Prince Street; and South Duke Street.

Among the findings was the recommendation of a “conference center,” to be located downtown, adjacent to the Brunswick Hotel on Lancaster Square.

“With upgrading of the [Brunswick] hotel,” said Winterbottom, “there is the opportunity to create a small, state-of-the-art conference center and additional hotel space.  If the renovation to the Brunswick is significant and if you can create that conference center, I predict that within five or six years you’ll have a second hotel.”

The Brunswick was originally built as a Hilton Hotel during the Lancaster Square ‘revitalization’ of the 1960s.  There was not sufficient downtown business to support the Hilton, and the prestigious franchise was canceled.  The hotel changed flags to a Brunswick hotel in the 1980s.

The Brunswick struggled financially, and depended largely on the patronage of groups of federal government trainees bused to Lancaster from Washington D.C.

The Hilton and a Hess Department Store had been constructed as end pieces of the 100 block of North Queen Street during the failed Lancaster Square re-development.

Hess closed within two years, and the re-named Bulova Building was adapted for the manufacturing of fuses. It has sat empty since 2009.

Winterbottom’s cost estimate for his “state-of-the art-conference center”: $6-$7 million

Bert Winterbottom also addressed the issue of the Watt & Shand building:

“The Watt and Shand Building at Penn Square is the heart and soul of Downtown, Lancaster City, and the County.  It is already a special place and one of great beauty, charm, interest and vitality. The challenge is to further reinforce this special place and to bring about the meaningful redevelopment of the Watt and Shand Building ... As this report is being written, the ownership of the Watt and Shand Building is being transferred from the current out-of-town owners to a small local group of owners at a fair price.”

The “small local group of owners” was, of course, Penn Square Partners, whose officers were also directors of the Lancaster Campaign, which was paying Winterbottom for his report.

Winterbottom went on later in the report to write something that, in retrospect, seems more knowing than prescient, as if he knew what was about to happen:

“Local private and public leadership must be prepared to support this project [development of the Watt & Shand] with their influence and their financial resources. This will not be an easy project. . . . While outright sale and development of the [Watt & Shand] property is most desirable, the owners and the community must also be prepared to consider a variety of partnership arrangements that may involve other local investors, the City, the County and the State.” [emphasis added]

At this point, early 1998, the project was still referred to as a “conference center,” and still to be located next to the Brunswick Hotel on Lancaster Square.  Both of those things would soon change

The importance of professional sports in Pennsylvania state politics was displayed during the gubernatorial campaign of 1998.

In that year, popular incumbent, Gov. Tom Ridge, a moderate Republican, decided to anchor his re-election bid to a controversial bill that raised the state debt ceiling of the capital budget by $500 million.

Gov. Ridge intended that $325 million of the new, borrowed money would be used to subsidize (by about one-third) the construction and renovation of four professional stadiums, two in Philadelphia and two in Pittsburgh.

The remaining $175 million was to be doled out to various “redevelopment assistance programs” elsewhere in the state. These programs included libraries, museums, and publicly financed convention centers.

With this much “free” money at stake, there was the inevitable scrap among legislators for the funds. After the scramble, if the bill passed, Lancaster County would be well-seated to receive a generous helping from Harrisburg.

During the 1990s, Lancaster County had two very influential legislators in Harrisburg.

They were Representative John Barley (100th District) and Senator Gibson “Gib” Armstrong (13th District), both Republicans, and both from the southern end of the county.

Together, Barley and Armstrong had been in Harrisburg more than 30 years, with Armstrong arriving in 1977, and Barley first elected in 1984.  Barley took Armstrong’s House seat after Armstrong moved on to the Senate that year.

If Charlie Smithgall was naturally suited to the job of small city mayor, good at cutting ribbons as well as backroom deals, then the Hon. John E. Barley was equally fitted to the role of state political power broker.

In 1998, John Elvin Barley, 52, – a wealthy dairy farmer and sludge seller, with no college education – was without serious argument, one of the most influential men in Pennsylvania.  At the time, Barley was chairman of the powerful House Appropriations Committee, and led Lancaster’s six-person (out of seven) GOP delegation in the lower house.

Appropriations chairmen are influential in deciding which bills get funded, which do not, and which die a slow death on the conference table. Once a bill arrives in Appropriations, the chairman has leverage over other legislators, whose vote he may want on another issue. Barley, a former GOP Caucus Secretary, Policy Committee Chairman, and Majority Whip, was regarded as a master of the process.

With his Tom Delay comb-over, expensive suits (one of Harrisburg’s ‘Best Dressed Legislators,’) and silvery speech (he took Dale Carnegie’s course), John Barley, in person, seemed more high-end car salesman than country farmer.

But his approach worked.  After the Governor, John Barley was probably the second most powerful Republican in Pennsylvania state politics.

“You don’t cross him,” said one unidentified legislator of Barley, in an April, 1998, Lancaster New Era article, “because he’s going to cross you back.”

Lancaster’s other heavyweight in Harrisburg was 54 year-old Sen. Gibson E. “Gib” Armstrong.  Armstrong was a clean-cut, former stockbroker, and ex-marine.

In the Senate, Armstrong chaired the Banking Committee.

Armstrong was particularly close to Charlie Smithgall, with whom he had a personal friendship.  Smithgall owned a farm in Drumore Township in the southern portion of Lancaster County, not far from Armstrong’s home in Refton.  For kicks, Charlie liked to blow up old cars with his cannons and other artillery down at his farm.  He’d invite friends over to watch him do it

In the Spring of 1998, Mayor Charlie Smithgall called a meeting and invited several leading Lancaster County business leaders, as well as Rep. Barley and Sen. Armstrong.   The main agenda item of the meeting was to determine the feasibility of Lancaster obtaining state funds for a downtown conference or convention center.

“I want to figure out if these guys [legislators] are going to give us the money to do this project. Just call me the Count de Monay,” Smithgall said, inimitably, to the Lancaster New Era.

A few days after Smithgall’s meeting, on April 2, 1998, the Intelligencer Journal first introduced to its readers the idea of using a room tax to match state funds for a convention center in Lancaster

“Local legislators, the county commissioners and Lancaster Mayor Charlie Smithgall are   considering imposing a countywide hotel/motel room tax to help pay for a proposed conference            center in the city.

Rep. Barley offered conditional support for state funding of a downtown center. “What we were trying to look at was the viability of the project,” said Barley in the Intell article, “and if there would be local support and some mechanism to raise the local match[ing funds].”

“If I were a county commissioner,” Barley continued, “I wouldn’t be interested in doing this unless I had the support of the affected community – the hotel people. I think they would come on board … it would mean more business for the hotels.  This would not be a tax levied on residents of Lancaster County. That’s the beauty of this way of funding such a thing.

Sen. Armstrong echoed his colleague.

“I think this could be the keystone that could really jump-start downtown Lancaster,” said Armstrong. “I said we should investigate [a room tax]. Let’s check it out with some of the people in the hospitality industry. The hospitality industry has to be reassured.”

After Tom Ridge’s decisive victory in the November election, in which he trounced his Democrat opponent, Ivan Itkin, 57% to 31% – the Governor was optimistic he could pass his Stadium Bill.  But it would be tight.

In counting votes, the Senate, with its sizable GOP majority, was safely in Ridge’s column and would pass the bill.

The House was a different matter. There, Republicans held a slim, 104-99 majority and many of those GOP representatives opposed the Stadium Bill. They objected to what appeared to be a naked pander to big city voters in Philadelphia and Pittsburgh. In fact, one of the bill’s biggest boosters was the Democrat Mayor of Philadelphia, Edward G. Rendell, who in a few years would occupy Ridge’s governor’s seat.

Pessimism for passage of the bill was expressed by House Majority Leader John Perzel, whose office released a statement on November 12,  “it is clear that support [for the bill] in our caucus doesn’t exist at this moment,” the statement read.

A spokeswoman for Rep. John Barley said to the Lancaster New Era, “Rep. Barley senses that at this time there is not enough support among the caucus for the bill, but he doesn’t sense at this time that it is dead.”

As the vote became imminent, and it was clear that the bill would be defeated, Lancaster’s local leaders acted as if it would pass, and that Lancaster would receive $15 million.

In fact, Mayor Charlie Smithgall wanted more.

“We might go for some extra money (in the stadium bill) because something else could come up, but I can’t discuss that right now,” Smithgall said to the New Era on November 24. “I’m being very vague, but I’m sworn to secrecy.”

Sen. Gib Armstrong also seemed to be counting on a local slice from the Stadium Bill despite its bleak prospects of passage.

“We are working to fund a major project in downtown Lancaster. That’s ongoing,” Armstrong said to the Lancaster Sunday News on November 22nd. “If the train is moving down the track, do you stand in front of it or do you get on and hope it benefits your district?”

Rep. Katie True, a Lancaster County Republican, signaled her support for the bill because it would provide funds for redevelopment of the Watt & Shand.

“As a McCaskey grad who grew up in Lancaster, I want something to happen in the city, particularly with the Watt & Shand building,” True said to the Sunday News.

Even Lancaster County’s lone Democrat in the House, J. Michael Sturla, was supportive of the bill because of the earmark for Lancaster.

“That [a conference center] is a particularly palatable project because it’s greased and ready to go.” Sturla said to the Sunday News on November 22nd.

When legislators returned to Harrisburg for a post-election session, it was clear that Gov. Ridge did not have the votes in the House for passage of the Stadium Bill.

The Philadelphia Inquirer, on November 29th, reported on the front page:

“STADIUM BILL FRUSTRATED BY LOCAL POLITICS

PHILADELPHIA LAWMAKERS BALKED.

MAYOR RENDELL ACKNOWLEDGED THERE WAS A ‘MISCALCULATION.’”

…House leaders had counted heads and come up short.  In the governor’s office, a  frustrated Tom Ridge placed a call to the home of Philadelphia’s number-one sports fan.  A groggy Ed Rendell answered.  Ridge told Rendell that the bill to fund a third of the cost of the new ballparks for the Eagles, Phillies, Steelers and Pirates was floundering. …”

It was Rendell who took the blame for the bill’s lack of support in the house.

“We probably could have started earlier,” Rendell said in the Inquirer article. “We were so interested in keeping this a low-key issue for a great deal of time that we may have made a mistake in not starting over the summer and talking to our delegation more, and talking to suburban leaders more.”

Ridge conceded that the bill would be defeated, and thus withdrawn from a vote, at a 1:45 a.m. press conference at the Capitol on November 29th.

Reports of the Stadium Bill’s death were exaggerated, or at least premature.

One month after the new legislature was sworn in, on February 4, 1999, an amended Stadium Bill passed the Pennsylvania House, and was immediately signed into law by Gov. Ridge.

The break in the legislative impasse was attributed to a deal worked out by House Majority Leader John Prezel.  Prezel, a Philadelphia Republican, came up with a plan in which the teams guaranteed that they would repay any state funds not recouped through taxes generated by their new stadiums.

The deal soothed enough suburban House Republican concerns to pass the $500 million measure.

Governor Ridge had a lot of help in getting his bill funded; now he was expected to show his gratitude.

When Ridge signed the Stadium Bill in the first days of February, 1999, Lancaster County was virtually promised a $15 million check to build a downtown convention center.

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

XXX

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Updated: January 21, 2013 — 3:56 pm

1 Comment

  1. They most certainly laid an egg, one that our grandchildren and great-grandchildren will still be paying for decades from now.

    Can you imagine how much real economic development would have happened in downtown Lancaster had that $15 million been spent on ANYTHING that had a positive return on investment for taxpayers?

    How many future projects will never happen because taxpayers will still be paying off construction loans and operational subsidies for this project decades from now?

    EDITOR: The $15 million is just a fraction of the misdirected tax money.

    Add the proceeds of the Room Rental Tax, ongoing state subsidies from sales tax collections, exemption from real estate taxes, complimentary services by the City of Lancaster, and the likely $2 million a year loss on convention center operations when repairs and renovations come due in a few years, and the annual cost must approximately another $6 or $7 million a year.

    Moreover, had the smaller conference center been placed in Lancaster Square East as originally proposed, there would not be a need today to raze the Brunswick, the Brunswick Annex and perhaps the Bulova Building.

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