Chapter Two: The Dream Team: Penn Square Partners

(Second in a series)

The “small local group of owners” mentioned in the Winterbottom report, negotiating to buy the historic Watt & Shand/Bon Ton building “at a fair price,” were headed by three of the twelve founding and executive committee members of the Lancaster Alliance – S. Dale High; Jack M. Buckwalter; and Rufus A. Fulton, Jr.

The powerful triumvirate – all three respectively the Presidents and CEOs of the county’s largest industrial business, High Industries; its monopoly publisher, Lancaster Newspapers, Inc.; and richest local bank, Fulton Financial Corp. – was about to form a new company, Penn Square Partners, a limited partnership with the High affiliate as general partner and subsidiaries of the Newspapers, Inc. and Bank as limited partners. . . and it would be the start of something really big.

The close relationship between LDR International Corp, the Lancaster Alliance and Lancaster Campaign is noted by Winterbottom on page two in the acknowledgments section of the study, called an “Economic Development Action Agenda,” and released in early February, 1998:

Our particular thanks go to [Lancaster Alliance board member] Lou Varljen who chaired the Project Coordinating Committee, Tom Baldrige, Executive Director of The Lancaster Alliance, Mary Barnard, Director of The Lancaster Campaign, and Tina Schmucker, Administrative Assistant to the two organizations. Their day-to-day guidance and direction, and enthusiastic participation throughout the process, made this a labor of love.”

Winterbottom did not identify the High, Buckwalter, Fulton group by name as prospective buyers in his report. The details of the transference of ownership of the building had not been finalized at the time of the release of his study, but a de facto deal was clearly in place. The question of which “local group” would get the Watt & Shand building seemed a decision already made, or the ‘fix’ was in, depending on how one looked at it.

The sale of the Watt & Shand building was a complicated business arrangement from the outset. After the collapse of the HACC proposal, the Bon-Ton company leadership made it clear they wanted to divest of the site, now vacant for three years. Bon-Ton said they were going to put the structure up for sale at a national public auction, something newly-elected Mayor Charlie Smithgall said he strongly opposed.

Immediately after taking office in the first week of January 1998, a month prior to the public release of the Winterbottom report, Mayor Charlie Smithgall stated he wanted the city to buy the historic Watt & Shand building in order to re-sell it to a local developer, to keep it on the tax rolls, but out of the hands of out-of-town investors.

Smithgall promptly appointed James O. Pickard as “Economic Development Director.” Pickard’s top priority was finding a private buyer for the vacant Watt & Shand building. Pickard, a successful businessman, part of the local Republican political establishment and a former Pennsylvania state Commerce Secretary, would take no salary for his job.

On January 12, 1998, a week after Smithgall’s inauguration, Pickard announced the city of Lancaster was, itself, negotiating with Bon-Ton to buy the building. Here is how the prospective sale was reported in the Lancaster New Era (”Sale of Bon-Ton to city expected within a week”) on that date:

In what could be a pivotal step in the revitalization of downtown Lancaster, city officials said today they expect to sign an agreement to buy the Bon-Ton department store on Penn Square this week.”

Pickard spoke about the process in selecting a private developer to whom to re-sell the building in the same article: “We want a completely open process,” he said, speaking on behalf of the mayor, adding: “This is the single most important thing we can do in the next four years.”

Smithgall indicated the city intended to hold the building for a short period until it could be re-sold to a private local concern. Assurances of impartiality from the Smithgall administration in selecting the developer appear to conflict with the new mayor’s close and established relationship to one set of prospective developers; the ones associated with the Lancaster Alliance, Penn Square Partners.

Winterbottom said as much when he pointed to Smithgall’s deep involvement in his study paid for by the Alliance:

Finally, Lancaster’s new Mayor, Charlie Smithgall, was an active citizen participant in the process several months before his election as Mayor, and well before his inauguration in January. …”

Given the new mayor’s intensive pre- and post-election participation in the Winterbottom report, it is possible that the gregarious, deal-making, politically shrewd Smithgall may have been inclined to tilt the playing field, i.e. the Watt & Shand building sale, in favor of his friends – and political supporters – from the Lancaster Alliance. They were also a known quantity.

If so, was the city’s purchase an arrangement to conceal from Bon Ton the interest of perhaps the three wealthiest entities in the region in its property?

On February 17, 1998, Bon-Ton sold the downtown historic structure, known as the Watt & Shand building, directly to Penn Square Partners for $1.25 million.

In covering the sale to the Intelligencer Journal of January 18, 1998 reported,

“’We’re looking at all the options,’ said S. Dale High, president and CEO of High Industries Inc., parent company of the real estate group.

‘We see it as a mixed-use building.’

Downtown merchants and others have suggested a variety of museums, giant-screen and foreign film theaters, heritage-oriented shops, a visitor’s center and restaurants.

High said his organization intends to carry out a full market analysis to find the right combination of uses that will succeed in the building.

We’re not going to rush and do something shortsighted,’ he said. ‘We want something with long-term value for the community.’”

If one put together a ‘dream team’ of Lancaster County businesses to form a business alliance in Lancaster County, Penn Square Partners would be that team.

High Real Estate, a subsidiary of High Industries, was the designated “General Partner” of “Penn Square General Corp.” –  the legal name of the partnership. Lancaster Newspapers, Inc. and Fulton Financial Corp. were limited partners, with Fulton taking a smaller investment share.

At the time the new Penn Square Partnership was formed, in February, 1998, S. Dale High had been head of the High companies since 1977.

Sanford H. High, Dale’s father, founded the company, then called High Welding Co., in 1931 with Sanford’s brother, Benjamin. It became High Steel, and subsequently High Industries became the name of the parent company.

Dale, as he was known, was the youngest of Sanford’s three sons. Calvin was ten years Dale’s senior and Donald between them in age.

Dale was the only one of the three boys to graduate from college; (Calvin left after one year; there is no record of Donald attending any college). Dale graduated from Elizabethtown College in 1963, with a degree in business administration. Calvin worked alongside his father in the executive branch of the business, and was president of the steel company for a few years in the early 1970s. Donald took a quieter, more modest career path, and operated a crane for 50 years.

When Dale came to work for the family company in 1963, High Steel had 60 employees and gross revenues of about $1 million per year. By 1997, annual revenues were approaching half a billion dollars, the corporation had dramatically diversified its services, and personnel had grown to nearly 3,000. Dale was largely responsible for that growth.

From the inception of the company in 1931, until the time Dale, at age 35, took it over in 1977, High companies owned no hotels. From 1988 to 1998, with Dale leading the company, High’s new hotel division built or purchased eight hotels.  And a hotel seems to be what Dale had in mind for Penn Square from the start.

John H. “Jack” Buckwalter, like his father, Isaac Z. “Izzy” Buckwalter, was a lifer with the company, owned for more than a century by the Steinman family.

Jack was a city boy and, after graduating from McCaskey High School, stayed home and took a degree from Franklin & Marshall College, before earning an MBA at Harvard. He followed his father into the newspaper business and, according to a puff piece written about him in 1996 in the Intelligencer Journal, Buckwalter rode to and from work with dad for a period of seven years.

In December 1988, 52 year-old Jack M. Buckwalter was named President and CEO of Lancaster Newspapers, Inc. At the time of his big promotion, Buckwalter held the same position as his father before he retired, executive vice president. Now, Jack was in charge of the whole thing – the three broadsheets; the popular farming tabloid; the Spanish paper, everything.

Rufus A. Fulton, Jr. (no relation to the bank’s namesake founder) had spent his professional life, about 30 years, with Fulton Bank before ascending to President and CEO in 1993. Fulton, like Buckwalter, started at the lower rungs of the company ladder; in his case, as an entry level trust officer trainee, and climbed to the top of the bank’s management hierarchy.

Fulton, like Buckwalter, was an early supporter of the HACC plan before it was killed. Both Rufus and Jack were also close social friends, who often lunched together at the exclusive, members-only Hamilton Club.

By early 1998, it was clear that HACC was definitely not coming downtown. Charlie Smithgall and the majority Republican, anti-HACC city council assured that. Now, the three partners – led by High – had to figure out something to do with the building they just bought.

On February 19, 1998, two days after it was announced that Penn Square Partners had purchased the Watt & Shand Building, a public presentation of Lancaster Campaign’s vision for downtown was held at the Armstrong World Industries headquarters on Liberty Street in Lancaster. The auditorium was reportedly filled with “hundreds of people,” according to the Intelligencer Journal.

At that meeting, Bert Winterbottom spoke: “If the renovation to the Brunswick is significant,” he was quoted in the Intell article, “and if you can create that conference center, I predict that within five or six years you’ll have a second hotel.”

At this point, in early months 1998, they were still calling it a “conference center”, perhaps in part at that time because at that time there was state funding for conference centers, and still locating it at the Brunswick in Lancaster Square. Both of those things were about to change.

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Chapter Three: Helping Hands in Harrisburg

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