Convention Center series awaits libel trial; Summary through 2006

Due to ongoing litigation whereby former Commissioner Molly Henderson is suing Lancaster Newspapers, Inc. and Arthur Morris for liable, NewsLanc finds this an inopportune time to research the Convention Center Series. Many of the major participants have or will soon give depositions and are not at liberty to discuss matters.

Should the case go to trial, it will provide a unique window onto what took place behind the scenes. NewsLanc plans to cover the trial in its entirety.

The report below prepared in the spring of 2006 by NewsLanc reporter Christiaan Hart-Nibbrig summarizes happenings during prior years and partially covers the period in the fall of 2004, described by the 31st article in the series, and continues to the outset of 2006.

The Convention Center series is a work in process. NewsLanc modifies and expands past articles as pertinent information is revealed. Upon completion, the articles will be edited into book form.  Whether the supporters or detractors were correct in their forecasts will not be apparent for at least a couple of years. Until then, an updated electronic draft version will need to suffice.

 

Convention Center Fight Splits Historic County

May 2006 by Christiaan Hart-Nibbrig

The region’s most powerful politician, a twenty-year State Senator is publicly rebuked by lawmakers of his own party. Two County Commissioners, a Democrat and Republican, ally to oppose a hotel/convention center project owned in part by the County’s monopoly newspapers, and become targets of near-daily front-page headlines. Before a spade of dirt is turned, a lobbyist/law firm bills the Convention Center Authority more than six million dollars, paid and rubber-stamped without disclosure of itemized bills. The same public authority has also approved another twelve million taxpayer dollars in questionable spending. Citizens march, write letters, blog, and charge conflict of interest, corruption, and malfeasance of public figures. The lawyers, consultants and bare majority of four of seven authority members bull ahead without answering questions. The closest thing to an answer to a question at an Authority board meeting is when the Chairman of Authority throws a pie at a taxpayer asking questions.

Newark? Baltimore? Pittsburgh? No. Welcome to Lancaster County, Pennsylvania.

The harmony of the county (pop. 500,000) in south central Pennsylvania has been shattered recently over a proposed $145 million hotel and convention center sited for the heart of historic downtown Lancaster city.

The project depends upon more than $34 million dollars in grants from the State, $76 million more in City and County taxpayer bond guarantees, and three million dollars a year in public subsidy.

And nobody believes it will stop there.

A public authority that has spent millions and millions of dollars on “consultants” for “professional services” even before ground has been broke administers the project. When the public (or Convention Center Authority board members) raise questions about how the project is being run, they are ignored or insulted by the board’s imperious chairman.

The dispute has turned into a civic battle royale, which threatens not only political careers, but also the long-term goodwill among its citizens, and potentially impacts the economic health of the entire region for years to come.

The fissures run deep, splintering both parties, and pits the area’s richest and most powerful business forces against a vocal, countywide grassroots opposition that includes several elected officials. In the process, the fight has turned some friends into foes, and citizens into crusaders for and against the project.

A loose, non-formally aligned band of City and County residents has been fighting the major political and economic powers behind the project. The controversy reaches all the way to Harrisburg, where the eight-year battle may soon be brought to a climax, to be settled by the Commonwealth’s vulnerable governor, Edward G. Rendell.

When the idea of a convention center for the city of Lancaster was first introduced, Ronald Reagan was President. In April 1986, Mayor Arthur E. Morris announced a committee would explore whether the city could support such a project.

The tentative idea for the center was not particularly grand. “I don’t envision a big place seating 10,000 people,” Morris said. No location for the project had been determined at that time.

When no private party stepped forward to finance a convention center in Lancaster, the idea lay dormant for several years.

In 1998, a report conducted by LDR International dubbed “The Winterbottom Report”, after Bert Winterbottom the lead LDR consultant, and as part of an overall study of downtown Lancaster, proposed a “small, state-of-the-art conference center of approximately 40,000-50,000 square feet” to be located in the east side of Lancaster Square of North Prince Street. The total cost was estimated to be little more than seven million dollars.

In the same year, a group of self-appointed business executives called “The Lancaster Campaign” formed a “Convention Center Task Force.” Ignoring recommendations of the Winterbottom study, in 1999 the Lancaster Campaign proposed building a 61,000 square foot convention center, to be built next to a 281-room hotel incorporating an existing landmark department store building, which had been abandoned. The site would include street-level retail shops, and a parking garage.

The hotel was to be built with $45 million in private investment; the $30 million convention center planned to use a $15 million State grant, along with a $15 million bond to be guaranteed by a tax placed on guests staying in local hotels.

It was at this time that Charlie Smithgall, a pharmacist with deep roots in the city, got himself elected mayor.

One of the very first things Smithgall did in office was kill plans of a private owner to sell that downtown department store building to a local community college.

The abandoned building in question is no ordinary building. Built in 1875, the four-story, 200,000 square foot Watt & Shand Department Store building was designed by eminent local architect, C. Emlen Urban, and is listed on the National Register of Historic Places for its outstanding 19th century Beaux-Arts architectural design. With its ornate façade and towering columns, the Watt & Shand enjoyed its place of prominence on the town square for more than a century.

It is also located in the same block as the former residence and business of Thaddeus Stevens (1792-1868), the great 19th century congressman. Stevens is credited as the principal author of and primary force behind ratification of the 14th and 15th Amendments to the U.S. Constitution, as well as the Reconstruction Act. He is also considered the father of free public education in Pennsylvania. The Stevens property is thought by archaeologists to be a likely site of an Underground Railroad stopover. The Stevens home will abut the proposed convention center, and much of it and adjacent properties is scheduled to be demolished.

The Pennsylvania Historical and Museum Commission, the state’s Bureau of Historic Preservation sharply criticized plans for the project and wrote, in part:

“Given the extent of development and demolition, the project as proposed does not meet the Secretary of the Interior’s Standards for Rehabilitation & Guidelines for Rehabilitating Historic Buildings and therefore will adversely affect the Lancaster Historic District…”

The Watt & Shand operated as a department store until 1995, when it was purchased by the Bon Ton Company. The Bon-Ton only kept the store open for three years before closing it for good.

At the time Smithgall was elected, the Bon-Ton Company was negotiating sale of building to Harrisburg Area Community College (HACC), which intended to establish a satellite campus in Lancaster. Smithgall objected to the sale, he said, because he did not want the building taken off city tax rolls.

The Watt & Shand takes up most of a historic city block just off Penn Square, smack in the middle of what is called “center city”. The impressive, still-handsome edifice stood vacant and boarded up, a hulking, empty reminder of past better days.

After killing the HACC acquisition, Smithgall first tried to persuade Bon-Ton to donate the building to the city. When Bon-Ton declined, Smithgall brokered the sale of the Watt & Shand between Bon-Ton and a newly formed limited business partnership called Penn Square Partners (PSP).

Penn Square Partners is an alliance of three of the most powerful and prominent institutions in Lancaster County: High Industries; Fulton Financial Corp.; and Lancaster Newspapers, Inc.

High Industries is the region’s largest industrialist; Fulton its leading bank; and Lancaster Newspapers the monopoly of the print press since 1794.

In February 1998, Penn Square Partners purchased the Watt & Shand building from the Bon-Ton for $1.25 million. S. Dale High, President and CEO of High Industries, said the partnership intended the building to combine retail and residential uses.

“We see it as a mixed-use building,” High was quoted in the newspaper after the purchase announcement.

The three-member board of county commissioners arranged an annual subsidy for the hotel/convent center by enacting a Hotel Room Tax, guaranteed a $40 million Convention Center bond, and created the Lancaster County Convention Center Authority, a seven-member civilian board jointly chosen by the city and county, to administer the project.

With unconcealed enthusiasm, the Lancaster Newspapers trumpeted the project. “Penn Square Complex is hailed as ‘Everything the City Needs’” blared the five-column banner headline of the Lancaster New Era August 26, 1999. Officials in city and county government and a large segment of the city population supported the proposed “luxury” hotel and 61,000 square foot convention center.

The price tag: $75 million.

This was to be the “magic bullet” that was to successfully “revitalize” Lancaster city’s ailing economy, which like many urban areas had been languishing for years.

The well-orchestrated media fanfare played very well locally. A large public meeting at the City Council chambers gave Ernst & Young, a hospitality industry consultant, State Senator Gibson Armstrong, Mayor Charlie Smithgall, and a host of former mayors an opportunity to endorse the project. The praise was effusive.

Mayor Smithgall: “This is a change to bring back the lifeblood of the city and I hope everybody supports it.”

Former Mayor Arthur Morris: “This project has my full support.”

Former Mayor Richard Scott (R): “I think this is exactly the right thing for the community… This is everything the city needs.”

State Senator Gibson Armstrong: “This is the best opportunity we’ve had in 20 years. This is the best opportunity we will have in the next 20 years. Timing is everything, and the time is now.”

At the first meeting of the newly formed Lancaster County Convention Center Authority (LCCCA), the board unanimously appointed the Reading, PA-based law firm of Stevens & Lee as its counsel of record. As it happened, Stephens & Lee also represented the Lancaster County Commissioners and High Industries, as its registered lobbyist in Harrisburg. The firm was also intimately involved in drafting the Convention Center legislation in Harrisburg.

Almost immediately, county hotel owners sued to stop the project, basing their case on the Convention Center Act of 1994, which disallowed building a publicly financed convention center if there were other comparable venues within a radius of 10 miles. There are two such existing facilities in Lancaster County.

Senator Armstrong, a Republican and fervent supporter of the project, amended the law, making it necessary that only a ‘publicly owned’ convention center be within that distance. This allowed the publicly financed hotel/convention center to circumvent the law. The amendment rendered the hoteliers’ claim invalid. This suite was thrown out/lost in August 2003.

Litigation costs: hoteliers $800,000; Convention Center Authority: $3,500,000

This would not be the last time Armstrong tried to customize the law to benefit the project.

Sometime during 2002 and 2003, the project begins to change. First, Penn Square Partners persuaded the Convention Center Authority to pay for all of the “shared space”. Then, Penn Square Partners persuaded the Authority to use Interstate Hotels, Inc., to manage to the proposed hotel and the convention center.

More of the Watt & Shand building was now to be demolished, along with a greater portion of the Stevens/Smith compound. And the convention center grew to 80,000 square feet.

In April 2003, the architects are asked to redesign the project to “reduce construction budget costs both for LCCCA and PSP.” This seems to be the point where the project began mutating into its current, much larger, incarnation.

After years of insisting there would be no public risk, in October of 2003, project supporters sought an immediate guarantee of the proposed $40 million in Convention Center bonds. With a few weeks’ notice, two ‘lame duck’ Commissioners approved the $40 million guarantee, and the Convention Center Authority immediately borrowed the money, despite the fact that it would be unneeded for years.

The radical change in size and scope of the project began in earnest in 2004 when Penn Square Partners began demanding more and more public financing for its “private” hotel. PSP’s demands for an increasing amount of taxpayer dollars nearly came unraveled in early 2005, when both the School District of Lancaster and the County Commissioners refused PSP’s demands for tax abatement over 20 years. PSP’s promises for payments in lieu of taxes were contingent on the hotel generation a certain amount of profit. At this point, Nevin Cooley of PSP declared the project dead.

Mayor Charlie Smithgall, State Sen. Gibson Armstrong, and State Rep. Mike Sturla “rescued” the project with a convoluted plan for a Lancaster city authority to construct and own the hotel building.

If there was a pivotal moment when public sentiment changed it was at a meeting of the School Board of Lancaster meeting when Penn Square Partners spokesman (now President) Nevin B. Cooley stood and faced the crowd and tried to persuade the audience that the Tax Increment Financing- (“TIF”) plan- PSP was proposing would eventually benefit of the schools and the city because the convention center would be so profitable. “This is the only hope the city has,” Cooley said to the crowd.

It was this meeting- and the attitude of the Partners- that sparked widespread citizen opposition, which has been led, in part, by a 50 year-old, single mother named April.

April Koppenhaver is a fast-talking, hyperkinetic Lancaster city businesswoman and force of nature who could not let this project go unchallenged.

“I was indifferent about the project until I learned that the financing had changed, that the public was now on the hook for most of the investment,” Koppenhaver says. “And when I heard Nevin Cooley stand up at the school board meeting and tell us this was our one and only hope, well… that really boiled my skin. He doesn’t live here. He doesn’t see the problems with putting a huge hotel and convention center in the middle of this particular city. He doesn’t see how this will hurt other good things starting to happen downtown. If he wants to put up a hotel and convention center that won’t work, fine, but don’t expect the public to pay for his bad idea.”

Up to this point, Koppenhaver was not actively involved in opposing the project. She immediately began to attend all the authority, city council, and county commissioners meetings she could fit into her schedule, and some she couldn’t. Soon she was speaking out at them. Then she sued. Koppenhaver started a loose-knit band of citizens to get information out about the project, Lancaster First. This group stays in touch about the issue via email distribution. They show up at meetings and in public spaces letting the community know their side of the issue.

The unwillingness of the Penn Square Partners to provide answers to questions about the project—some required to be answered by State Law—awakened serious concerns in two of the three County Commissioners, Republican Dick Shellenberger and Democrat Molly Henderson.

Shellenberger and Henderson are a political odd couple. Shellenberger comes from the most conservative wing of a conservative Lancaster County Republican Party. He is a former farmer and restaurant owner, whose wife has been a key member of the “kitchen cabinet” of U.S. Representative Joe Pitts. Henderson, the former Head of Public Health for the City is a former college teacher, holding a doctorate in education. Henderson’s lawyer-husband chairs one of the largest local municipal authorities, and is a former President of the Economic Development Company of Lancaster.

Also elected to the three-person board in 2003, was second-term Commissioner Pete Shaub, who supported the convention center project—although he voted against the “midnight” 2003 bond guarantee.

Coming from opposite ends of the political spectrum, Shellenberger and Henderson came to believe that the convention center project was poorly conceived, executed for benefit of lawyers and consultants, and designed to be on permanent and increasing governmental life support. Both were deeply concerned by the rising cost and expanding scope of the project, and the rubber-stamp spending of the authority board, especially as it became apparent that no independent feasibility study had been performed, contrary to the promoter’s claims.

On the issue of the convention center, Chairman Shellenberger split party ranks with Shaub (a rarity in GOP dominated Lancaster County) as well as the City’s Republican Mayor Smithgall and powerful State Senator Armstrong. Henderson broke party ranks with the only elected Democratic State Representative from Lancaster County, Mike Sturla. Shellenberger and Henderson started taking measures at the county level to see that the project was not railroaded without check.

The fallout from this alliance was swift and not to be anticipated, and only Henderson’s and Shellenberger’s personal resolve and strength that has allowed them politically and psychologically to survive the almost continuous scathing criticism from the Lancaster Intelligencer Journal, the Lancaster New Era and the Lancaster Sunday News, all of which are owned by Lancaster Newspapers, Inc., one of the three major investors in the proposed Marriott Hotel.

Lancaster Newspapers, Inc. has been publishing continuously longer than any paper in the United States (including the NY Post, which erroneously makes the claim). Since 1794, the Intelligencer Journal has been the paper of record in Lancaster. In 1877 and 1923 respectively, the Lancaster New Era and the Sunday News were added to the Steinman newspaper group. These papers dominate and are unchallenged in Lancaster County, where it also publishes local papers in other county communities, as well as the area’s only Spanish-language newspaper, La Voz Hispana.

The Intelligencer Journal, Lancaster New Era, and Sunday News all went after Henderson and Shellenberger with viciousness and persistence that stunned the community.

Sample headlines from ‘news’ articles: “Shaub Accuses Henderson of Attempting to Kill Hotel Project”; “Project Foes Bash Center/Hotel”; “Critics Hammer Penn Square Project.”

Despite the relentless, often daily attacks, the two Commissioners were able to slow the momentum of the project with board motions, and raise important questions that couldn’t be easily dismissed or ignored given the stature and power of the Commissioner’s office.

The Board of Commissioners (without Shaub’s vote) engaged the pre-eminent hospitality consultant, PKF Consultants, to conduct the first ever genuine feasibility study on the project. A private citizen pledged $65,000 of the $115,000 study. The study will be available by the end of April 2006.

An earlier study by PricewaterhouseCoopers was asked to be withdrawn by the consulting firm because the size and scope of the project had changed so dramatically as to render the original market study non-applicable.

It became clear that the newspaper attacks—often personally insulting and factually incorrect (one New Era editorial called Shellenberger the “agent of death”)—were not coercing Henderson and Shellenberger to drop their opposition to and questions about the convention center. So the Lancaster Newspapers’ coverage shifted to another issue—the claims of mishandling the sale of the county nursing home—in an apparent attempt to destroy the credibility of the commissioner board.

There are others who are challenging the project. Luis A. Mendoza is a 65 year-old Colombian-born, ex-member of the Lancaster City Council (1998-2005). Mendoza and former Lancaster city comptroller, R.B. Campbell, have been virtually the only city officials to take strong opposition to the project.

Mendoza was an early supporter of the convention center. “As long as it was straightforward, I supported it,” he says. “The previous board of commissioners secured the $40 million bond. There was money from the state, and there was a private risk on the part of Penn Square Partners. I saw no reason to object.”

But after the hoteliers’ suit failed, Mendoza says he started to notice changes kept popping up from partners. “I began to see all sorts of manipulation. The Mayor [Smithgall] and [City Council President Steven] Diamontoni were giving the board things to vote on- serious proposals- and we didn’t have the time to read and review documents. The Mayor, Diamontoni and [Rep.] Mike Sturla were pressuring the members to vote on these things the way they wanted.”

Mendoza is also critical of the press coverage. “I believe the newspapers did not properly inform the public over this issue, or they deliberately misled the people. What has happened and continues to happen is pretty much a crime against the taxpayers.”

One of the most colorful characters is a 42 year-old self-described “good government activist”, Ron Harper. Harper, a stout father of five, is an extremely energetic, technologically sophisticated pain in the ass to anyone unfortunate enough to get caught between his crosshairs. His paying job is as an “oppositional investigator” for the State Republican Caucus of Lancaster County. This means he digs up dirt and turns it over to the local GOP. Harper has the nerve of someone who doesn’t get embarrassed easily. Through his website, 5thEstate.com, Harper has been dogged (and inventive) in his efforts to stop the project. It was he who brought a pie—“humble pie”, says Harper—for the Convention Center Authority board to eat. Then-Chairman James O. Pickard threw the pie at Harper.

Another key individual in this controversy is Robert Edwin Field, a prickly 69 year-old real estate developer, investor, film producer, and philanthropist, who is adamant that the project be thoroughly analyzed before public money is committed to it. Field, with 40 years of successful development and investment (including hotels outside the area), was astounded to discover that the proposed hotel and convention center never had a genuine feasibility study.

In 2005, Field—who believes “an informed public, over time, tends to make better decisions”—funded a Fox News/Opinion Dynamics poll, which showed 78% of those with an opinion opposed taxpayer bond guarantees for the project. When the newspapers refused to publish the results, Field took ads out in the papers to disclose the results. This showed that the newspaper coverage was out of step with countywide sentiment on the issue.

After obtaining and reading copies of purported “feasibility” studies, Field engaged a Member of the Appraisers’ Institute (MAI), who authenticated that those studies were, in fact, “market” or “marketing” studies, and did not represent the scope and depth of a genuine feasibility study. This was an important because these studies were repeatedly represented as “Feasibility Studies” to public officials and on an application for a $15 million state grant, a potentially serious misrepresentation on the part of Penn Square Partners.

Field also launched a website, www.NewsLanc.com. The website has disclosed errors and omissions made by the papers. It has also broken news like the discovery that Penn Square Partners never submitted a Traffic Impact Study to the state department of transportation, which was necessary as the project impacted state roads.

Several “Right-to-Know” requests for information have been filed with the Convention Center Authority. One of those requests, for “all itemized bills and statements” from the Authority’s principal law firm, Stevens & Lee, yielded 227 invoices each on a single piece of paper. Every one of these sheets—billings which total more than $6.3 million and make up more than one-third of the total expenses of the Board—describes the work done as simply: “For professional services rendered on behalf of the Lancaster County Convention Center Authority.” There is no other itemization on the bills.

This is contrary to standard accepted business practice, where attorneys typically indicate precise times and the nature of the work done and who did the work. None of that is on these statements.

And the amounts are staggering. Stevens & Lee has billed nearly $100,000 per month since the inception of the project, all “For professional services rendered…”. Stevens & Lee recently disclosed time sheets pertaining to a billing for “services rendered” to the County Commissioners pertaining to another project. From press reports, it appears that $95,000 of the invoices totaling $288,000 was overbilled.

EDITOR’S NOTE: In 2009 NewsLanc obtained copies of hourly billings by Stevens & Lee and a report entitled “Qualitative Review of Legal Services by Stevens & Lee for the Convention Center Project in Lancaster County”, Pennsylvania by Chief Justice Emeritus Stephen A. Zappala, that found nothing to suggest the charges were not in order.

The Stevens & Lee expenditures are part of a larger and growing concern about the overall administration and spending of the seven-member Lancaster County Convention Center Authority (LCCCA) Board.

The Authority Board, through its Executive Director, David Hixson, has paid consultants millions before any construction has been done. A public relations firm has been paid hundreds of thousands of dollars. Oversight from the boards has been minimal. Board members are not allowed to review bills individually, despite repeated written requests to do so.

Three recently appointed board members—Laura Douglas, Deb Hall, and Jack Craver—have raised questions and objections about the project. They have been ignored or shouted down at meetings by the Board’s Chairman, C. Ted Darcus. Unlike their fellow Board members, these three have business experience that bears on the project. Crave was Executive Vice President and General Manager of the famous Place Hotel in New York; Douglas is a successful business owner who must meet payroll and expense demands; Hall is Executive Director for the Ephrata Area Chamber of Commerce.

Laura Douglas LCCCA Board member since 2005 sums up her experience with the Authority:

“Quite simply, the Convention Center Authority is the worst-run organization I have ever encountered, much less been a part of. Meetings seem to be held at the whim of the chairman without regard for the schedule. Since I’ve been a member of this board, only two meetings have been held when scheduled.

Materials to be voted on at meetings are not provided until 36-48 hours before the meeting. Many of these documents are legal or highly specialized in nature, requiring lengthy study to review properly before being able to vote or even ask cogent questions.

The single most important document- a 500 page set of agreements among PSP, RACL and LCCCA were provided less than a week prior to the meeting despite the fact that they had been presented to the City Council and were therefore available three weeks earlier.

The behavior of the chairman and the Executive Director makes clear that they do not care what anyone else’s thoughts, questions, challenges, or ideas may be. They are going to push through whatever they want whenever they want to do it. When board members ask legitimate questions, they are castigated for not addressing them in private instead of letting the public know what issues there may be. We are treated with scorn and sarcasm.

Concerns of the public are not only not addressed except through “Right-to-Know” requests, but disregarded altogether as obstructionist and unworthy consideration. It is very clear to me that this Authority has no regard for the source of its revenues. It clearly considers that this is a trough of free money at which they intend to continue to feed as long as they can, whether value is provided or not.

There are absolutely no benchmarks, standards, or criteria of success for any area of the project. The chairman and executive director seem simply to throw money at Penn Square Partners.

The organization places all negotiating power in the hands of these attorneys despite the fact that a staff member of the firm is a lobbyist for the developer, in other words, the other side.

I have absolutely no confidence at all about the ability of this organization to build this project, keep it within budget, much less run the facility after the fact.”

The convention center business is extremely competitive at the third-class city level. According to a widely circulated Brookings Institute study (2005) of the national convention center market, the pronounced downward trend began prior to September 11, 2001 at all levels of the convention center business. After the terrorist attacks, the industry continued its slide.

The current convention center market is difficult for a number of reasons. A convention center must always continue to scramble for events, forcing discounts and incentives. Meeting debt service with operating losses often requires additional funds. Owners still must pay for utilities maintenance and labor even when the center space is given away free. This boosts annual operating loss. Still, the public continues to finance convention centers.

Brookings states: “While the supply of exhibit space in the United States has expanded steadily, the demand for convention and tradeshow exhibit space has actually plummeted.” Also, according to Brookings, advances in communications technology have obviated bringing people into a convention or conference. It’s cheaper to have a videoconference. Convention bookings are at 1993 levels, according to Brookings. Industry consolidation has also reduced the need to convene a large conference.

Even the market studies commissioned by developers Penn Square Partners suggest Lancaster’s relatively weak position in the convention market. The local airport only provides service to Pittsburgh, so that most convention visitors arriving by plane would need to come through Harrisburg International Airport or Philadelphia International Airport. The city lies twenty miles off the Pennsylvania Turnpike, and is not served by any through interstate highway. The convention center would be located in the most congested portion of downtown Lancaster, and visitors arriving by automobile would have to wend their way through a maze of city streets.

As quaint as Lancaster city is in some respects, the town is notably lacking most of the recreational activities, amenities and nightlife that many conventioneers seek.

Supporters of the project point to the millions of tourists (8 million in 2001) who come to the area each year. But visitors come to Lancaster County to observe the Amish, visit the rural villages and communities, and shop at the suburban discount outlet stores. Most that come into Lancaster city are brought in by bus for an hour and half shopping at the Central market, a popular bazaar that draws produce and goodies from the entire county. When past visitors to suburban Lancaster conference centers were queried, they pointed to the proximity to golf courses at the host hotel as a major attraction.

Scranton, Erie, Altoona, Pittsburgh, Baltimore are among the cities with failed or failing partially publicly funded convention centers. Allentown appears to be an exception, but its spike in “inquiries” likely reflects the city obtaining a license to operate slot parlors. In Pittsburgh, a center defeated by voters was built anyway.

Perhaps the gravest concerns are voiced by two financial officials, one currently in office, one who recently left.

Craig Ebersole is the current Lancaster County Treasurer:

“To date, expenditures by the Lancaster County Convention Center Authority have been taken from lodging tax revenue. When the Authority’s current loan from Citizens Bank is re-marketed into municipal bonds, they will, according to its own financial advisor, begin annual debt service payments of about 2.7 million. They also anticipate annual operating losses of between $650,000 and $850,000 per year. Together they would need approx. $3.5 million in lodging tax revenue per year or about 10% more than the best year ever in six years of tax revenue history. They project funding this gap with lodging tax revenue from the new hotel, but their numbers assume this to be new visitors, and not diminishing existing facilities. Others that I have spoken with in the industry place annual operating losses at one to two million dollars a year, which would only widen the funding/spending gap. If there were a funding gap, the first monies in play would be the portions of the lodging tax that is currently paid to the PA Dutch Visitors Bureau for the purposes of promoting the Convention Center. If this happens, and marketing money is used to simply pay light and heating bills, a slippery slope could quickly become a downward spiral. Thus the County Government General Tax Fund would be in play in this scenario.”

R.B. Campbell, former Lancaster City Comptroller, on the project:

“I am concerned that the taxpayers are being unfairly burdened with the majority of the financial risk of the project with very little financial risk to the private owner. A scheme to shelter the owner of the proposed hotel from having to pay their fair share of property taxes and various fees to the City appears to be illegal, and state grant funding for the project is guaranteed by the City.”

Because of his concerns, Campbell refused to sign documents and suit was brought against him by then-Mayor Charlie Smithgall, compelling him as City Controller to sign the documents. Pennsylvania Commonwealth Court has heard the case, and decision is pending.

Today, the total convention center space is 220,000 square feet, more twice the size of the original project, and nearly four times the size of the LDR/Winterbottom report recommendation. The hotel is now described as “business”, rather than the promised “luxury”, which is a downgraded hospitality industry designation. The total cost is currently estimated by developers to be $145.5 million, which includes the parking garage.

EDITOR’S NOTE: The final cost reportedly was approximately $178 million dollars.

The endgame is imminent. And there are signs convention supporters are getting desperate. The Lancaster New Era, reprising its role as project cheerleader, recently published an editorial (“Conventioneers like the small town feel”) which essentially told readers there was nothing to worry about that the market was strong and getting stronger, and that this project would be a roaring success.

Senator Armstrong again went to the legislature to help the project. This time, he attempted to gut a bill (HR983) designed to give tax breaks to film producers who made movies in the state. Armstrong took out the original language wholesale (angering its author), and inserted provisions that would almost singularly give additional tax breaks to convention center developers. When the bill was sent to the assembly a few weeks ago, it surfaced that Armstrong never made the Lancaster County Republican delegation aware of his changes. The delegation, whose constituents largely do not support the project, bristled and came out publicly against the “backroom” tactics, likening it to the politically poisonous late night pay raise legislators gave themselves last year.

Finally, in an apparent attempt to create a fait accompli, project sponsors have announced demolition will begin in early May, 2006, apparently ignoring imminent findings of the PKF Feasibility Study, and paying no heed to ongoing litigation and the uncertainty of state funding.

Opponents believe that the PKF Feasibility Study will give the public- for the first time- the facts concerning the economic viability of the project. They point out that State grant applications for $15 million have been filed; wrongly stating Feasibility Studies have been done.

Whether downtown Lancaster will be a future venue for conventions is still an open question. How it will be answered now largely depends on a 62 year-old Philadelphian, currently living in Harrisburg and in the political fight of his life.

Governor Edward G. Rendell must weigh past political commitments to provide state funding for the project against the findings of the forthcoming Feasibility Study, a possible investigation of the project’s attorneys, and signs that the historically tight-knit local establishment along with the vast majority county electorate has turned against the project. How the Governor decides this issue could determine the next four years of his life, and impact the future decades of people in Lancaster County.

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Updated: March 25, 2010 — 9:26 am
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