Does new CRIZ Bill provide Lancaster Marriott Hotel with $10 million gift?

 

Editor’s note:  At the request of a reader, the below has been expanded to explain the above conservative reference to a “$10 million gift.”  8/7/’16

 

In laboriously making our way through the recently enacted Pennsylvania Bill #1198, Session of 2015, an “Act relating tax reform and State taxation by codifying and enumerating certain subjects of taxation …”, we encountered a convoluted paragraph that at first defied our comprehension (and apparently that of others.)

It appears to allow Penn Square Partners, Dale High’s and Lancaster Newspapers partnership, to take a credit for the current estimated $500,000 a year in Marriott hotel room sales taxes in addition to the credit that, without this special carve out, it would be entitled to for its proposed  addition to the hotel.

The $500,000 in gifted credit would cost the taxpayers $10,000,000 over a 20 year mortgage,  $12,500,000 over the course of a 25 year loan, $15 million if the financing is for thirty years.

CRIZ is a form of Tax Increment Financing (TIF) that is based on utilizing future tax revenue resulting from new enterprises to induce investment, theoretically in depressed neighborhoods where investment otherwise would not take place. (Downtown Lancaster is depressed?)

CRIZ subsidies are not paid back by the recipient but are borne by future taxpayers.  In other words, they are a gift.

It is virtually unprecedented to also include taxes generated from an existing facility as part of the revenue stream to justify a subsidy (gift). State Bill 1198 makes no similar provision for any other enterprise.

To assure that we properly understood the special provision, we wrote the following to Penn Square Partners:

CERTIFIED MAIL; RETURN RECEIPT REQUESTED

August 9, 2016

Mark Fitzgerald,

Executive Vice President and Chief Operating Officer

Penn Square Partners | P.O. Box 10008, Lancaster, PA 17605-0008

 Re: Marriott Hotel, Lancaster, PA

 

Dear Mr. Fitzgerald:

I have been reading House Bill 1198, Session 2015.

According to Page 146, item “c”:   “Recalculation. — The department shall not recalculate the baseline of a zone designated prior to the effective date of this subsection to include the hotel occupancy tax imposed under Part V of Article II.”  

Does this mean that Penn Square Partners will be allowed to include the hotel room sales tax it will be paying on its existing 299 rooms as well as the hotel room sales tax generated by the rooms it will be building as part of its calculation for CRIZ benefits? 

(We have redacted the contact information – Editor.)

Thank you in advance for responding to this media request.

Sincerely,

NEWSLANC.COM

Robert E. Field, Publisher

 

We sent a similar letter to Randy Patterson, Director of Economic Development & Neighborhood Revitalization for the City of Lancaster.

We will promptly report on PSP’s response, should we receive one.

 

POSTSCRIPT:   Randy Petterson soon thereafter exchanged constructive letters with NewsLanc substantiating our contentions that we will reproduce as part of a continuation in this series post Labor Day along with our comments and elaborations.

 

 

 

 

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12 Comments

  1. Notice to all present and future taxpayers and hotel/motel owners…….get out the Vaseline….PSP has done it again!! And the approving authorities fall right in step as always.

    Can anything be done to stop this relentless pursuit of ‘free’ taxpayer money by two of the wealthiest privately-owned businesses in Lancaster County????

  2. Private companies stealing tax payer money. [Convention Center] loses money every year but the companies lose nothing. Shut it down

  3. You’re going to ask questions if you want to find out the truth. That’s just amazing.

    There’s no reason in the world why these folks need to get 10 to 12 million dollars for what

  4. Lancaster citizens could stop this by composing a referendum to disallow private entities from using tax monies, present or future, without it first being voted on by the citizenry gaining enough signatures for it to appear on the ballot, citizens could then decide where they want their taxes to be spent. From everything I have read, Lancaster is categorized as a third class city and as such they are permitted to do so.

    I learned this years ago from an activist who wrote a similar bill and the citizenry voted overwhelmingly in favor of the bill.

    Unless he is totally off the mark, and I would love for an expert to get to the bottom of this as to its factual reality, it is truly in your hands. And believe me, I wouldn’t be surprised at all if the LNP et al suddenly campaign for a status change for the city.

  5. It’s the residents of Lancaster County that are depressed…every time they read about this money pit.

  6. What about places like Urban Place, who were self funded without state/ government money that actually cleaned up a terrible part of the city? Why not give them money, they actually bring a lot of business to that area that was otherwise a wasteland.

  7. I don’t understand why a privately-held hotel would be receiving money from the state. they don’t have to pay it back. It’s not a loan it’s a gift.

  8. Whose paying for this, and did the taxpayer’s approve it..As, a Taxpayer, I emphatically say, “NO”..Who’s with me..Enough for this Hotel, enough!

  9. Just shows you that money comes to those that don’t really need it

  10. So…..is there any way, is there any hope of stopping this before any dirt is moved???

    Is there anything that can be done to prevent this continual robbing of the poor by the rich?

    Can the State’s Attorney General office call a halt to these proceedings, until it’s office conducts a full an impartial investigation into the shenanigans that took place between two prominent privately-owned multi-generation businesses; and every conceivable elected official within City and County and even State row offices?

  11. That is a good reason to move out of this area!! That is what .my family is doing!

  12. Pay for your own damn hotel and convention center.

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