(Twenty-fifth in a series)

By Christiaan A. Hart-Nibbrig

The $15 million grant from the Commonwealth, and the revenue from the hotel room tax, provided the LCCCA with millions of dollars to defend the project in court, and to acquire property for the proposed development.

After buying the Oblender furniture store and properties at 45-49 S. Queen Street and 21 and 23 E. Vine Street for about $1.3 million, the Authority found itself presented with another public relations predicament.

The poorly maintained, but structurally sound, buildings at Vine and Queen Streets were not every day buildings. They happened to be the former home and business of one of the greatest Americans in the country’s history—Thaddeus Stevens.

Stevens, a severe-looking, bald (due to disease), club-footed, republican Congressman during the Civil War and Reconstruction Era, was the moving force behind of the 13^th, 14^th, and 15^th Amendments to the United States Constitution. Those amendments—emancipating African-Americans, giving African-Americans citizenship, and providing African-Americans with the right to vote—are as historically consequential as any in the nation’s history.

Thaddeus Stevens is also credited with establishing widespread free public education in Pennsylvania. For decades, he ran a successful law practice in Lancaster from the Queen and Vine Street location. Arguably, Stevens is the most impactful American to call Lancaster home, far more consequential than the feckless James Buchanan, the country’s 15^th President, whose former residence (Wheatland) just west of the city has been lovingly restored.

Another of the buildings acquired by the authority belonged to Stevens’ longtime confidante, the mixed-race Lydia Hamilton Smith who, apart from being a pioneering black businesswoman, was also said by historians to have been a ‘conductor’ on Harriet Tubman’s Underground Railroad network, helping fugitive slaves escape the slave holding South.

The issue confronting the convention center authority was that the location, where the great American Stevens made his home and business, was directly in the way of where they wanted to build their convention center.

Randolph Harris was the Executive Director of the Historic Preservation Trust during these years. Harris, a conscientious historian, was acutely aware of Stevens’ historical significance. Harris was also cognizant that the Trust owned easements on those properties, requiring the Trust’s approval for any alteration done to the buildings. In 1983, the easements had been signed over to the Trust by the last owners of the buildings.

In December, 1999, soon after the LCCCA board was formed, Harris wrote a letter to Pickard advising him of this fact. Pickard did not respond, and by June, 2000, all of the properties were purchased by the Authority.

In early January, 2001, the Trust announced a proposal to create a ‘Thaddeus Stevens and Lydia Hamilton Smith National Historic Landmark’ on the properties. The Trust recommended that the LCCCA restore all of the buildings and create a museum around the Stevens/Hamilton theme.

In February, 2001, Pickard announced the authority would preserve the building facades. Those facades, at the very least, will have to be incorporated into the architecture of the convention center building,” he was quoted in the Lancaster Newspapers. “Overall, the aesthetics will fit in. Even though it’s going to be a new building, we want it to reflect the heritage of Lancaster.”

Pickard clearly bristled at having to address the Stevens property issue. He stated the authority was unaware of the easements when it purchased the buildings in March, 2000. Pickard blamed the company overseeing the sale, Commonwealth National Title Insurance Co., for not making the authority aware of the easements. The authority originally planned to raze the buildings, until Harris objected, citing the easements.

The authority and Trust explored the possibility of integrating the historic buildings into the convention center design. But center planners objected, concerned that it would reduce the size, and jeopardize the viability of the project.

In April 2001, after negotiating with the Redevelopment Authority of the City of Lancaster (RACL), the Convention Center Authority board voted unanimously to invoke eminent domain and relocate, as in physically transport, three of the historical buildings across the street to a vacant parking lot behind the Swan Hotel. Most historians, including Harris and Robert C. Wilburn, president and chief executive officer of the Gettysburg National Battlefield Museum, thought the idea was a bad one.

“For one public body to be making a decision with another public body in a vacuum, without consulting with people who know about historic preservation law, is not wise,” Harris fumed after the meeting to move the buildings.

“This was scripted, orchestrated, ad infinitum,” Harris continued, “(Authority members) wanted to make the perception we were all engaged in this discussion. But it’s a smokescreen. It’s bogus.”

Even staunch project proponent State Sen. Gibson Armstrong objected to moving the buildings. Armstrong, whose wife sat on the board of directors of the Historic Preservation Trust, publicly questioned moving the buildings. “We don’t need any more lawsuits and we don’t need any more problems,” he said to the New Era.

The rhetoric and public relations campaigning on both sides of the historical building issue got heated.

In May, 2001, Pickard sharply criticized a mayor from South Carolina who publicly spoke about preserving the buildings where they were. Pickard blamed the Trust for “lobbying” for its side.

The issue was effectively resolved on May 22, 2001, when the RACL board voted unanimously to nullify the Stevens/Smith easements held by the Trust. The Intelligencer Journal reported “Nullifying the easements on the historic properties is valid, as long as the convention center authority buys the Swan Hotel, said Thomas Weber, chairman of the redevelopment authority.“

The Authority now could do what it pleased with the properties, and it did.

(Twenty-fourth in a series by Christiaan A. Hart-Nibbrig)

The bitter acrimony among the Lancaster citizenry that would mark the next decade of the convention center’s history began to show itself by the year 2000.

Dozens of Lancaster County hotel and motel owners—who now paid a 5% tax for every room rented—filed a joint lawsuit against the project sponsors in March.

Ron Harper, Jr., with his video camera, website, and indefatigable energy, was unleashed and asking uncomfortable questions to proponents of the project wherever he found them.

Downtown store owners, like the respected Rick Atwater, whose family owned and ran Oblender’s Furniture for a century, were left sour after feeling forced to sell out on the cheap.

At regularly scheduled Lancaster County Convention Center Authority (LCCCA) meetings, questions from the public went unanswered. A pie was thrown; insults hurled.

Nearly an entire city block of historic buildings were targeted for demolition.

But the project, stewarded by James O. Pickard, Chairman of the seven-member LCCCA board of directors, proceeded apace.

Jim Pickard ran LCCCA meetings with an imperious hand and an iron gavel. A former republican Pennsylvania Secretary of Commerce (Thornburgh administration, 1983-87), Pickard was also Lancaster Mayor Charlie Smithgall’s handpicked Economic Development Director. From that position, Pickard was a key player in the 1998 purchase of the historic Watt & Shand building by Penn Square Partners.

Pickard, owner of a successful, international, niche saw and knife export business, was a client of Stevens & Lee LLC,, the Reading-based law firm that authored the Convention Center Act of 1994. Stevens & Lee was also the solicitor for the LCCCA and the County, and High Industries’ registered lobbyist in Harrisburg.

The LCCCA business offices were located within the Lancaster branch of Stevens & Lee, on the second floor of the Fulton Bank building on Penn Square, across the street from the proposed facility. The other Penn Square Partner, Lancaster Newspapers, occupied another corner of the Square.

During 2000 and part of 2001, nominally “public” meetings were held in both the County Commissioners’ meeting room, and the tiny Commissioners conference room, where there were, at times, no seats available to the public. By mid-2001, the meetings moved to the City Council Chambers at the cavernous Southern Market Center on Vine Street.

Meeting attendees usually included only board members, whose attendance was often sporadic, and a scant few members of the public. Harper was one of the few citizens regularly present, as were a few hotel and motel owners, such as Rodney Gleiberman of the Continental Inn and Peter Chiccarine, of the Best Western Eden Resort.

As chairman, Pickard displayed a penchant for removing the audience from a meeting mid-stream, while he held executive sessions with only board members and the solicitor – Stevens & Lee partner, and County Attorney, John Espenshade – present. These ‘executive session’ actions caused the attendees and reporters to stand out in the hallway for extended periods until Pickard re-convened the public part of the meeting. (This was a practice later used often by Ted Darcus, a successor to Pickard as LCCCA chair.)

The meetings themselves were often testy and oddly rude exchanges for a community with a reputation for civil comity. If a hotelier made a public comment during a meeting, and they were often the only members of the public there, Pickard would announce, before the speaker said anything that the speaker was a litigant against the Authority.

Sometimes the histrionics devolved into farce. At one meeting in early May, 2001, Harper presented Pickard with a chocolate cream pie—“humble pie,” Harper called it. With mock deference, Harper placed the pie in front of Pickard, who sat in his center seat on the raised dais. In a rage, Pickard roughly grabbed the pie and threw it back toward Harper. He missed, but the entire act was recorded by the local television news cameras and played for the folks at home. Pickard looked unhinged. The small crowd was stunned.

“You’ll get no apology from this chair,” Pickard snarled at Harper. Pickard was criticized by the Lancaster Newspapers, and later apologized for his actions (but not to Harper) at the next meeting.

The other six members of the LCCCA board of directors were a relatively unknown mix of business executives, lawyers, and working stiffs, none of whom, save one, had any experience with conventions or trade shows.

The original members appointed by the County were: Pickard; Garth Sprecher, a communications executive; Camilla Collova, a retired corporate executive; Paul Wright, retired general manager of a large retail store. The city appointees to the LCCCA board were: Willie Borden Jr., a journeyman electrician, Bradley Clark, vice president of a commercial realty firm; and Christina Hausner, an attorney.

Clark was the only member to have any experience with trade shows, or event planning and promotion, and it was not extensive.

The hotelier litigation provided Pickard the justification to prevent the board from answering questions from the public during LCCCA meetings. But the policy proved to be public relations problem and eventually forced Pickard to address it publicly.

Pickard wrote a public “clarification” published in the Lancaster Newspapers:

“We wish to clarify what the public comment section of the agenda is for — and will add this above point of clarification to all of our agendas. We also wish to clarify what the “public comment’ portion of the agenda is NOT: It is not a question and answer session. It is not an opportunity for plaintiffs or defendants in a lawsuit to conduct discovery. The Authority has complied with all the requirements of Sunshine Act and welcomes public input and comment during our meetings. It is not the intention of the Authority to avoid being responsive to legitimate questions, but the lawsuit filed by the hoteliers has had a chilling effect on our ability to respond. We have been advised by our legal counsel that it is inappropriate to respond to questions or comments from the public that impact the pending litigation. …” [capitalization in original]

In a rarely critical comment against the LCCCA, a Sunday News editorial (“Misguided Policy, The Convention Center Autority Overreacts To Requests For Information About The Project”) suggested the authority board open itself up to questions from the public.

The external pressure didn’t faze Pickard, who refused to answer questions, from anyone, regarding the authority’s finances, including the status of the authority’s budget or its building plans.

In a letter to the Lancaster New Era, Mark Clossey, General Manager of the Lancaster Host Resort and Hotel, and a litigant against the Authority, wrote:

“When you cannot ask questions at a public meeting, and are silenced for asking for more information, it reflects how wrong the project truly is. I have never been allowed to enter the arena since a few politicians and bureaucrats said the hotel and convention center is going to be built. I guess that means at any expense. This type of process defeats such projects, not a lawsuit.”

At a later LCCCA board meeting, after Clossey asked a question during the public comment portion, Pickard glared at Clossey, “I’m not obliged to answer any of your questions,” He then added: “The question you just asked falls in the classification of not being responded to.”

by Christiaan A. Hart-Nibbrig

(Twenty-third in a series)

“I know you’re asking a question and I’m not answering it.”

– James O. Pickard, Chairman and Executive Director of Lancaster County Convention Center Authority (LCCCA), to an audience member at a LCCCA public board meeting, May, 2000

Beginning January 1, 2000, every hotel and motel within Lancaster County’s 940 square miles was required to remit a five percent tax to the county for every room rented.

The levy, enacted the previous September by the Lancaster County Commissioners, was imposed to subsidize the construction of the Lancaster County Convention Center. Part of the money would also be used to fund the local tourism board.

The majority of the tax revenue, paid monthly by the hotel and motel owners to the County Treasurer, went to the newly formed Lancaster County Convention Center Authority (LCCCA). The Authority, a seven-member board of directors appointed by the city’s Mayor and County Commissioners, was also established in September. Its mandate: to build what was then projected to be a 61,000 square foot convention center for $35 million. The proposed convention center would be adjacent to a $40 million “privately-owned” “four-star” “luxury” hotel, located at the site of the historic Watt & Shand building.

Less than three months later, on March 24, thirty-seven county hotel and motel owners, followed through with their threat, made prior to the Commissioners’ vote to impose the tax, and collectively filed a lawsuit in the court of Common Pleas in Lancaster County against the city and county of Lancaster, as well as the LCCCA.

The Brunswick Hotel, the original site for the center, was one of the original 37 plaintiffs in the civil court action.

The ‘Armstrong Amendment,’ surreptitiously passed in the fall of 1999 by fervent project supporter Sen. Gibson Armstrong, exempting the current project from the 1994 Convention Center Act, had virtually neutered the hotelier case.

The basis of the filed suit was that the project presented an unfair “burden,” i.e, the tax; with little or no demonstrated “benefit” in the way of spillover, or added business to the hospitality industry. The hotel and motel owners’ legal brief also charged that the Armstrong Amendment was a transparent ‘end run’ around the law, an abuse of power aimed solely at aiding the Lancaster project.

Court documents from the hotel and motel owners ask for an immediate end to the tax, and a refund of all tax monies collected. The case was heard by Judge Louis Farina. In a few years, Farina would emerge again, and play perhaps the most critical role in getting the project completed.

The lawsuit didn’t stop the project from proceeding. In fact, it seemed to embolden the Convention Center Authority, Penn Square Partners, and project supporters. It also appeared to anger them.

Lancaster Newspapers promptly unleashed prominent stories sharply criticizing the hoteliers.

“OFFICIALS VOW TO FIGHT HOTEL LAWSUIT,” screamed the Lancaster Sunday News on the Sunday after the Friday filing.

“CENTER BACKERS SLAM LAWSUIT,” shrieked the Intelligencer Journal the next day.

In the Intell article, LCCCA Chairman Pickard was quoted saying the hotelier suit was “nothing more than a short-sighted attack on Lancaster County tourism and businesses. It is a lawsuit based on fear, a lack of understanding, self-interest and, most of all, an absence of vision.”

State Sen. Gibson Armstrong, torturing the English language, also hit the hoteliers: “Instead of supporting our effort to help bake a bigger tourism and business ‘pie’ for all of Lancaster County,” Armstrong said, “these hoteliers want to avoid any chance of a bigger pie and are fighting to keep their own selfish slivers of the status quo.”

Also speaking in support of the project in the LNP articles were Mayor Charlie Smithgall, City Council President, Nelson Polite, Tom Baldridge, president of the Lancaster Chamber of Commerce and head of the Lancaster Campaign.

Even Dale High (or a public relations flack) waxed poetic on “our courageous and visionary authority, city, county and state leaders in this unique window of opportunity, we can restore economic vitality to our county seat.”

Following Lancaster Newspapers practice, opponents of the project, or “regular” Lancaster County citizens were not quoted in the articles.

The Lancaster Newspapers’ response was the journalistic equivalent to the military tactic of a ’shock and awe’ campaign. It would not be the last time LNP, and its partners in business, employed this tactic of war on what they viewed as enemies of their project.

The first order of business for the Pickard-led, seven-member LCCCA board – after hiring Stevens & Lee as solicitor – was to begin the process of purchasing the surrounding properties around the proposed location.

The Authority, had $35 million in taxpayers’ money to spend, $15 million from the state grant and $20 million from a bank loan. In March, it purchased four properties bordering South Queen Street, Vine, and Christian Streets. They bought the land and buildings for a reported $539,900.

A more difficult acquisition for the Authority was the purchase of the 40,000 square foot Oblender’s Furniture store, a family-owned business that had been doing business at its 37 South Queen Street location for almost 80 years. Oblender’s was situated right next door to the proposed development, and its ownership would have preferred not to sell.

Rick Atwater, the earnest, hardworking great-grandson of the founder of the business, and its executive vice-president, didn’t want to lose what took his family generations to build. Atwater, a man with a reputation of impeccable integrity, who personally had worked for Oblender’s for more than 30 years, was first approached by Chairman Pickard.

Pickard came to Atwater with an offer of $725,000 for the Oblender property. The property had been assessed at more than $1 million three years earlier. But when Atwater agreed and Pickard submitted the price to the LCCCA board, the board rejected it, and instead offered $675,000. This became the agreed upon price, and the deal was signed in April, 2000. Scott Spencer, a Stevens & Lee attorney, was hired by the Authority to perform the legal work.

Rick Atwater had seen few options. “There was the threat of eminent domain,” says Atwater today. “We felt we had little choice. If we would have fought it in court it could have taken years, and we still could have lost. I will say this, and I can’t speak about the deal because of the agreement, but we paid more than twice the settlement for our current location (Furniture that Fits, on Columbia Ave. in Manor Township) for half the space to relocate out of downtown.”

###

Next installment: Part II: The sweetest of deals – PSP scores again… and again… and again!

by Christiaan A. Hart-Nibbrig

(Twenty-first in the Convention Center series)

He is described as a “watchdog” “pest” “gadfly” “political activist” “lunatic” “provocateur,” among other terms, depending on who is doing the describing.

But whichever words are used, Ron Harper, Jr. has indelibly written his name on the pages of Lancaster County history, particularly the history of the convention center and hotel project.

Harper first came into the consciousness of the county during the 1999 County Commissioners’ race. Harper, 35 at the time, was the campaign manager for the Christian-right, Constitution Party candidate, Casey McDonald.

With a small fraction of the campaign funds of his opponents, particularly the cash-rich (and Penn Square Partners’-backed), republican, Paul Thibault, Harper as a campaign operative nimbly used the local media to draw coverage to his candidate.

McDonald finished a distant fifth in the November election, but Harper was just approaching the starting gate.

In February, 2000, Ron Harper, Jr. launched his website, 5thestate.com. Since then, Harper has been a wasp sting to the flesh of the Lancaster establishment.

“I saw in Lancaster County that raw political power was in the hands of a few people,” says Harper today. “It appeared that the power was being used in a self-serving manner, and I vowed to myself to do something about it.”

Harper combined facility with digital technology; rabbinical knowledge of the Pennsylvania and U.S. Constitutions; and the physical energy of a hyperactive humming bird, to wreak a most unique kind of civic havoc in Lancaster. (As a youth football player, he was known – surprise, surprise – as “Hyper Harper.” A two-way player; he played center and nose tackle.)

City-raised, eighth generation Lancaster County, born-again, Lancaster Bible College graduate, married, father of five, and perhaps the most socially outgoing person in the 6,000 years since mankind’s creation on Earth, Ron Harper, Jr. knew his home turf intimately.

Read the rest of this entry »

(Twentieth in a series)

By Christiaan Hart-Nibbrig

With unconcealed enthusiasm, the Lancaster Newspapers trumpeted the convention center 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.

The praise was effusive:

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

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

 Fomer Mayor Richard Scott:  “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 for the next 20 years.  Timing is everything and the time is now.”

Despite feverish, pro-convention center hype regularly featured on the pages Lancaster Newspapers, an investor in Penn Square Partners, there arose strong local opposition to the project in the last days of summer in 1999.

A constant refrain coming from supporters was that the convention center and hotel project would especially help the local hospitality industry. They were unsuccessful in persuading those ostensibly said to benefit from the great idea.

On September 10, 1999, less than one week before the Lancaster County Board of Commissioners voted to impose the room tax (and an additional excise tax) on County hotel and motel owners, the Board was formally notified in writing that such an action violated Pennsylvania law, and, if passed, could result in a lawsuit against the county.

“The [Convention Center] Act is not applicable to Lancaster,” warned Christopher C. Conner, an attorney with the Harrisburg-based law firm of Mette, Evans, & Woodside, on behalf of the Lancaster Host Hotel and Conference Center.

Conner seemed to have a sound legal argument. Section 13102(c) (1) of the Act is unambiguous. It reads: “This Act shall not apply to a county which has an existing convention center which covers an area of more than 40,000 square feet.”

The Host, located just five miles from the proposed site, had 72,000 square feet of convention center space. Additionally, noted Conner, privately-owned Franklin & Marshall College also maintained a facility of more than 50,000 square feet which was also used for convention center purposes.

“It is clear from the Act,” wrote Conner, “that the legislature did not intend that public financing and the imposition of a hotel room rental tax be used to construct a convention center that would compete with an existing convention center of more than 40,000 square feet.”

Conner’s warning had no effect, and the commissioners unanimously enacted the taxes and established a convention center authority to spend them on September 15, 1999.

The close relationship between republican Pennsylvania Governor, Tom Ridge, and the Republican members of the Lancaster County legislative delegation, was evident from the inception of the Lancaster Convention Center and Hotel project.

In exchange for support of his $500 million Stadium bill, Ridge shaved off $150 million to dole out to helpful allies in the legislature. The Governor was especially grateful for the support of the Lancaster delegation, led by House Appropriations Chairman, John Barley, and Sen. Gibson “Gib” Armstrong, and promised a $15 million state grant for a convention center in downtown Lancaster.

Senator Armstrong was a particularly fervent backer of the convention center project, and a personal friend and active political supporter of Lancaster Mayor Charlie Smithgall, perhaps the biggest supporter of the project.

In Harrisburg, on October 19, 1999, Armstrong introduced an amendment to House Bill 148, originally intended to authorize county appropriations for Flag Day observance, and used that pretext to reenact the Convention Center Act with a single change. Armstrong changed only the scope of the Convention Center Act. This was known afterward as the “Armstrong Amendment.”

Again, here is the original language of the 1994 Convention Center Act:

“This Act shall not apply to a county which has an existing convention center which covers an area of more than 40,000 square feet.”

This is Armstrong’s 1999 change:

“This subdivision shall not apply to a county which has an existing convention center owned by, leased by or operated by an existing authority or the Commonwealth with covers an area of more than 40,000 square feet.” [underline added]

By amending the scope of the Act, Armstrong rendered the principal legal challenge on Section 13102 invalid.

There was not a single word of the change – to a law that directly impacted the people and economy of Lancaster County – published in any of the Lancaster Newspapers until after the bill passed the Senate (October 20, 1999) and the House (October 26).

Bias can be revealed by what is not published, as well as what is published. Lancaster Newspapers’ biased coverage is demonstrated in this case by its not reporting what the senior Senator in its district was doing in Harrisburg. One of the basic functions of journalism in a free society is to audit the elected representatives of the people. As journalists, the editors of Lancaster Newspapers utterly failed its readers in not reporting Armstrong’s activity. It would be one of many such examples.

The Governor signed the revised law on November 3, 1999, and on November 5, with cameras flashing, Ridge was in Penn Square handing over (and posing next to) an oversized $15 million check to project Armstrong, Mayor Smithgall, Baldridge, and the rest of the project’s sponsors and supporters.

The Armstrong Amendment still raises the temperature among some local hotel operators. “There was no coverage of what Armstrong was doing, because it was done in secret,” says Rodney Gleiberman, General Manager of the Continental Inn. “While Armstrong, and other backers were characterizing us [hotel and motel owners] as ’selfish’ and criticizing us for getting ready to file a ‘frivolous lawsuit,’ he was busy in Harrisburg. Gib changed the law, and basically deflated our best argument, and one not previously litigated, and legitimized our case at the same time as neutralizing it.”

The hotel and motel owners were wounded, but not conceding.

On March 24, 2000, a group of 37 of them representing different hospitality establishments, large and small, across Lancaster County’s vast 940 square miles, engaged Mette Evans and filed a civil lawsuit in the Court of Common Pleas in downtown Lancaster.

The suit asks for declaratory and injunctive relief on a total of eight counts of alleged federal and state violations of Constitutional rights.

With respect to federal Constitutional violations, the hotel and motel owners argue in their suit:

“The County Ordinances, the City Ordinance and the Armstrong Amendment, facially and as applied to the Plaintiffs, constitute arbitrary, capricious, irrational and unreasonable regulations and legislation which violates Plaintiffs’ substantive due process rights as secured by the Fourteenth Amendment to the Constitution of the United States…”.

The hotel and motel owners argued that the tax imposed “a substantial burden on the Plaintiffs without a corresponding benefit or with a disproportionately low benefit from the tax revenues.”

The lawsuit was heard first in December of 2000. It would not be the last battle in the courtroom.

###

Next Installment 2000:

(Eighteenth in a series)

By Christiaan A. Hart Nibbrig

When Governor Tom Ridge signed the Stadium Bill in the first days of February, 1999—adding half a billion dollars to the Pennsylvania state capital budget—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.

Almost immediately, the project, which had been at the discussion stage for years, and enjoyed seemingly unanimous local support, began to change significantly.

The comity, civic high-mindedness, and community involvement that had marked the project’s early planning vanished, replaced by a lack of transparency, ‘old boy’ patronage, and an apparent absence of due diligence on basic questions of feasibility. These questions, never fully answered, would define the next tortured decade of the Lancaster County Convention Center and Hotel project.

The first and most obvious change was the physical location of the proposed center. The much promoted LDR International (“Winterbottom”) Report of 1998, commissioned by the Lancaster Campaign, recommended a “conference center” located in Lancaster Square on North Queen Street, adjacent to the Brunswick Hotel, which Winterbottom suggested be extensively renovated.

Another study, conducted by the Pinnacle Advisory Group, and also commissioned by the Lancaster Campaign, recommended the Lancaster Square location, too. The Pinnacle study was never released.

After Ridge signed the bill, the only site discussed publicly was the Penn Square location of the former Watt & Shand building, across the street from the Fulton Bank and the Lancaster Newspapers’ buildings. No public explanation was given at the time for the switch. “We were the prime location [for a convention center];” the Brunswick’s marketing manager said to the New Era, “for whatever reason the winds had shifted to Penn Square.”

Mayor Smithgall said recently the location of the center was moved to Penn Square because the owners of the Brunswick, a Philadelphia-based corporation, would not return his phone calls, but this was not reported. [A senior executive of the company, G&F Management, Inc., declined to comment on negotiations between his firm and the city of Lancaster, or on any personnel matter concerning any current or past employee.] Daniel Logan, a controversial consultant hired later by the Convention Center Authority and paid nearly a million dollars, was then the local representative of G & F Management.

The historic Watt & Shand building was purchased the previous year by Penn Square Partners, a limited partnership consisting of High Real Estate as General Partner with a 45% interest; the Lancaster Newspapers as a limited partner with a 45% interest; and Fulton Bank as a limited partner with a 10% interest. The price was $1.25 million. The CEOs of the partners respectively were S. Dale High, Jack Buckewalter and Rufus Fulton.

The cost of the convention center also changed dramatically. Winterbottom’s estimate was $6 million for a center at the Brunswick site; now, the cost was blown up five times, to $30 million, plus another $45 million for the “Four-Star,” “Luxury” hotel that would now be built by Penn Square Partners.

In order to receive the $15 million from the state, funneled through the Department of Community and Economic Development (DCED), the county had to match, dollar-for-dollar, the Commonwealth grant.

The local legislative mechanism several other Pennsylvania counties used to get the matching funds was the levying of a countywide hotel and motel room tax. This levy—enacted by the county commissioners, collected by the county treasurer, and administered by a public convention center authority—allowed a tax on each hotel and motel room rental at a rate between 0.5% and the statutory limit of 5.0 %. The tax money would be used to pay back money borrowed to build the center.

The enabling state legislation—The Pennsylvania Third-Class County Convention Center Act of 1994—was written and championed by the powerhouse law firm of Stevens & Lee. The Reading-based corporation was also the registered lobbyist of High Industries, the General Partner of Penn Square Partners. Stevens & Lee was also the long-time solicitor of record for Lancaster County, in this capacity for more than a decade.

By 1999, Stevens & Lee could list among its many clients, Berks County (Pa.) and the Berks County Convention Center; and Luzerne County (Pa.) and the Luzerne County Convention Center.

Until this point, the senior Lancaster County state legislative representatives—House Appropriations Chairman, Rep. John E. Barley, and Sen. Gibson E. Armstrong—strongly supported the convention center concept, but both gave similar caveats for their support.

“I wouldn’t be interested in doing this [implementing a hotel room tax] unless I had the support of the affected community—the hotel people,” Barley said to the Lancaster New Era.

Armstrong echoed his colleague. “The hoteliers have to support it,” said the senator.

Republican County Commissioner Terry L. Kauffman seemed to be reading from the same memo: “It can’t compete with existing businesses. It has to help them.”

The problem was that the “existing businesses”—Lancaster County’s hotel and motel owners—didn’t think the convention center and hotel project would help them at all.

Rodney Gleiberman is currently, and was in 1999, the general manager of the 165-room Continental Inn on Lincoln Highway East in suburban Lancaster, near the popular outlet malls and the Dutch Wonderland amusement park. His father, Michael Gleiberman, with whom he co-owns the Continental, has developed more hotel rooms in Lancaster County than anyone.

“If I felt that this project offered any upside to my business, I would support it,” says Gleiberman today. “The reality is that this hospitality project has zero un-interested support from within the local hospitality industry, as it is not grounded in a complete and thorough feasibility study, any reasonable anecdotal nationwide track record, or the slightest bit of common sense.”

Gleiberman wasn’t the only hotelier to hold this view. He is one of dozens of hotel and motel owners that form the membership of the Greater Lancaster Hotel & Motel Association (GLHMA). The organization’s businesses represent more than half of the total rooms available in the county.

In the summer of 1999, before the tax was voted on by the Lancaster County Commissioners, GLHMA conducted a survey of 58 hotels listed with the county’s Pennsylvania Dutch Convention & Visitor’s Bureau (PDCVB). Of the 58 establishments, 54 voted against the project; three abstained pending more information. There was only one supporter among the hotels contacted—the Hampton Inn, owned by High Hotels, a subsidiary of High Industries, a partner in the project.

Peter Chicarrine, part of the executive management of the 280-room Eden Hotel and Resort and GLHMA member, said to the New Era. “Before we spend $30 million for a facility and another $45 million for a hotel, I think we should get the facts, and nobody has done that.”

Another GLHMA member, Tom Zeager, owner of an historic inn in Strasburg, was more blunt. “I think this will be a white elephant on the backs of the taxpayers. I don’t think it will work.”

The underlying economic justification for building a publicly financed convention center and adjoining 281-room privately-owned hotel was a $60,000 study commissioned in February, 1999, and fully funded by the Lancaster Campaign. The Ernst & Young “Market Study, Cash Flow Estimates, and Economic Impact Analysis,” released to the Campaign in July of 1999, was the basis for the feasibility of the project.

The first striking thing about the Ernst & Young study is that it isn’t a feasibility study at all. In the world of real estate appraisal, “Market” and “Feasibility” studies are distinctly different by definition. Ernst & Young intentionally called its report a “Market” study because it was not the much more substantial and comprehensive “Feasibility” study, which includes, among projects of profits and losses, a market study. Ernst & Young worked in a world where these terms were clearly an established part of the nomenclature of the business.

(The only actual Feasibility Study of the project was performed in 2006 by industry leader, Pannell, Kerr, Forster (PKF). The PKF report was jointly underwritten by the County and Robert E. Field, a local businessman, philanthropist, and publisher of NewsLanc.com. The PKF Feasibility study showed that many of the fundamental assumptions of the project were flawed, and that the revenues from the tax would not pay the operations costs of the center and the debt service on the massive taxpayer guaranteed borrowings.)

The second noteworthy aspect of the Ernst & Young study is the secrecy with which the report was released. Again, unlike the Winterbottom study of the year before, which held several public meetings that included organizations and regular citizens, the methodology of the Ernst & Young report was limited primarily to discussions with certain government officials, and a few carefully selected representatives from the hospitality industry. The community and some government officials were conspicuously left out of the process.

A reading of the report suggests why it was kept secret. While Ernst & Young concludes that a 61,000 square foot convention center and a 281-room adjoining hotel is the “most appropriate” of the four “scenarios” it analyzed, the report was very clear that a much more thorough study was needed. “It is important to note,” the Executive Summary states, “that this does not take into account the estimated costs associated with the development of each Scenario, the financial feasibility or the anticipated returns”. [Emphasis added.]

Moreover, the Ernst & Young study lists 23 “Critical Success Factors” for the project. The report names only three “Competitive Strengths” for the Lancaster project (costs to attendees; event costs; road access from major feeder markets). There were a total of seven “Competitive Weaknesses,” (air access; cultural and entertainment attractions; population; industry concentration; historical demand for lodging/meeting facilities; market image; other quality of life issues.) It seems Ernst & Young thought Lancaster had more going against it than for it.

The release of the Ernst & Young report was also handled very differently from the Winterbottom study, which was highly publicized and freely disseminated. The Lancaster Campaign’s Chairman, Tom Baldrige, promised the GLHMA members a complete copy of the report would be available to them.

In a letter to Allan Erselius, Executive Director of the PDCVB, August 12, 1999—four weeks after receiving the completed Ernst & Young report—the Campaign’s Baldrige rescinded his offer to the hoteliers to release the complete Ernst & Young study.

“At the most recent meeting with hoteliers,” Baldrige writes, “I assured them that they would get copies of the complete Ernst & Young study as a means to further their due diligence on the project. Unfortunately—and with much apology—I have been informed by Ernst & Young that I am not permitted to share the complete report.”

The full report, which was finished in mid July, 1999, was not released publicly until after the County Commissioners passed the Hotel and Motel Room Sales Tax on September 15, 1999.

by Christiaan Hart-Nibbrig

(Seventeenth in a series)

(Editor’s note: Hart-Nibbrig explains: “The project started out as one thing, and ended another. I am showing how it started.”)

The importance of professional sports in Pennsylvania state politics was illustrated during 1998.

In that year, popular incumbent Republican Tom Ridge decided to anchor his re-election bid to a controversial legislative measure that raised the state’s capital budget debt limit by half a billion dollars. Gov. Ridge wanted to use $325 million of the new, borrowed money to subsidize, by about one-third, the construction and renovation of four pro sports stadia; two in Philadelphia and two in Pittsburgh.

The remaining $175 million was to be apportioned among projects elsewhere in the state, including the construction of publicly funded convention centers.

There was the inevitable political scrum for the leftover money in the corridors of the Capitol and when it was finally over, Lancaster County would find itself especially well-positioned to receive a very generous portion.

If Charlie Smithgall was a naturally adept small city mayor, good at cutting ribbons as well as deals, then the Hon. Representative John E. Barley (R-Conestoga) was equally well-suited to the role of modern legislative power broker.

In 1998, John Elvin Barley – 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, representing the state’s 100^th District in the southern portion of the county, was Chairman of the powerful House Appropriations Committee and led Lancaster’s six-(out of seven) person Republican delegation in the lower house.

Appropriations is the committee that decides which bills get funded, which do not and which die a slow, agonizing death on the conference table. Once a bill arrives in Appropriations, the Chairman has considerable 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.

At the time, the Senate was solidly Republican; the GOP held a decisive 30-20 majority. Ridge could count on the Senate’s passage of his bill. But the House was a different matter. There the Republicans held a tenuous majority (104-99), and many of them opposed what appeared to be a Ridge pander to the big city voters. Many Democrats also had their own concerns. The Governor needed every vote from his own party. He needed John Barley’s help to get them.

With his Tom Delay-styled comb-over, expensive suits and silver speech (he took Dale Carnegie’s course), John Barley in person seemed more high-end car salesman or slick sports agent than country farmer. But his approach worked because after Gov. Tom Ridge, Barley was perhaps the second most powerful Republican in the Commonwealth of Pennsylvania.

“You don’t cross him,” warned an 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 in 1998 was Sen. Gibson E. “Gib” Armstrong (R-Refton) representing the state’s 13^th District, an area that also includes part of York County.

Armstrong was a scrubbed, college educated (B.S. Economics), externally modest, former investment advisor and ex-U.S. Marine Captain. From 1977-1985 he occupied the House’s 100^th Assembly District seat, the one taken by John Barley the same year.

When Armstrong was first elected to the Senate in 1985, Republicans held a slim 27-23 majority. By 1998, the party had a 30-20 majority and one of their own in the Governor’s mansion. Armstrong, with more than a decade in office, was now in a position of leadership in the upper chamber. Ridge didn’t need him as badly as he needed Barley, but he still needed Armstrong’s support on the critical bill.

By 1998, Armstrong was Chairing the Labor & Industry committee and serving on the influential Rules and Finance committees. (In 1999, he would switch from Finance to Banking & Insurance. He retired in 2008 as Senate Appropriations Chairman.) He was also an active backer of his friend, Lancaster city mayor, Charlie Smithgall.

In the Spring of 1998, Mayor Charlie Smithgall convened a meeting of leading county business and tourism industry figures, as well as Sen. Armstrong and Rep. Barley.

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

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

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

“I said we should investigate [a room tax],” Armstrong was quoted in the article. “Let’s check it out with some of the people in the hospitality industry. The hospitality industry has to be reassured.”

Rep. John Barley signaled his conditional support for a downtown convention 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.”

“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.”

After Ridge’s convincing victory in November, 1998 and a virtually unchanged legislature (the Senate stayed at 30-20; the House Republicans lost a single seat, to go 103-100), the debt cap increase bill was still very much alive.

Before the expected critical House vote, Barley, sounding like the convention center deal was all but sealed, said in the New Era on November 24, 1998, “[The convention center] could be there [at Lancaster Square], could be Penn Square,” Barley said. “It would be in the city.”

Mike Sturla, the county’s lone House Democrat, said in the Sunday News, “[The convention center] is a particularly palatable project because it’s greased and ready to go.”

“If the train is moving down the track,” Sen. Gib Armstrong said in the same news story. “Do you stand in front of it or do you get on and hope it benefits your district?”

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

Despite Ridge’s strength on November 25, 1998, the Governor’s Stadium Bill simply lacked the votes in the House to pass and the GOP House leadership decided not to bring the measure to vote. For the moment, the proposal was dead. Philadelphia Mayor, Ed Rendell, was widely blamed for the defeat for not securing the support of Philadelphia-area Democrat House members, particularly those from the Black Caucus.

The Governor and his supporters were undeterred. “The governor is more committed than ever,” John Barley said to the Sunday News after the measure was stalled, “This will adequately fund projects in places like Lancaster, York and other areas.”

He was right about Lancaster and in the first days of February of the next year, 1999, Tom Ridge (with a 136-62 ‘Yes’ House vote; 35-14 in the Senate), and the cities of Philadelphia and Pittsburgh, got their stadium money. And Lancaster, it appeared, would receive millions for its convention center. And there was much, much more cash to come…

###

Next installment - “1999: Lights, Camera… [legal] Action!”

(Sixteenth in a series)

By Christiaan Hart-Nibbrig

When Charlie Smithgall, former two-term mayor of the city of Lancaster [1998-2006], today speaks of the place where he was born, raised, and spent a lifetime, his 63 year-old blue eyes rim with moisture.

“My wife [Debbie] and I got a lot of our wedding furniture at the Watt & Shand,” Smithgall says from Smithgall’s Pharmacy, the family business his has owned since 1916. “I had an uncle who worked there. I love this city.”

“I haven’t gotten past 534 West Lemon my whole life. I started at 549, and now I’m at 534,” laughs the stout, silver-haired, affable Smithgall. He is speaking from inside the modest pharmacy at the corner of Lemon and Pine Streets, in the northwest portion of the city.

It is a sunny, late May morning in the year 2009, a lull in the business day at the pharmacy. Charlie Smithgall, three years removed from office and considering a mayoral write-in re-election bid next year — (”I’m not sure if I’ll run,” he says. “I need to get some clarification from [voter registration chief] Mary Stehman on whether ‘Chuck’ Smithgall or ‘Charles’ Smithgall or ‘Charlie’ Smithgall will be counted.”) – is talking about how the downtown convention center project came into existence.

The role of Charlie Smithgall in the financing, construction and straight up vision it took to build the Lancaster County Convention Center and Marriott Hotel cannot be overstated. His influence is arguably as important as anyone connected with the most expensive and controversial project in the history of Lancaster County. Without Smithgall, it simply would not have happened and it certainly could not have happened as it did.

Before he was elected, Smithgall, the endorsed Republican candidate for mayor in 1997, was among the leading voices (along with former GOP mayor Arthur Morris and business owner, Steve Murray) opposing locating a campus of the Harrisburg Area Community College (HACC) at the Watt & Shand/Bon-Ton building, arguing publicly he didn’t want to see the building taken off the tax rolls.

After the HACC deal was killed, it was Smithgall who, after learning Bon-Ton intended to put the building out for national public auction, first committed the city to buy the building from the Bon-Ton owners.

Smithgall did this in his first days in office in January, 1998.

But it turned out the new mayor didn’t need to buy the building. According to Smithgall, he – as mayor of the city of Lancaster – brokered the deal that ended with the sale of the historic building to Penn Square Partners. Here is his account:

“There was this meeting over at High’s offices at Greenfield. It was right after I took office in January,” Smithgall says. “At the time, I knew the city was sitting on $10 million from the sale of sewer rights to Lampeter Township. That money was not to go into the General Fund. I knew the city had that money, and that part of it could be used to buy the building. I had a plan.”

“We were all coming up with ideas at the meeting. Someone was writing them on one of those boards you write on with markers,” continues Smithgall. “I thought we could sell shares for $250,000 per share. I just went around the room, one by one, and asked [Fulton Bank President and CEO] Rufus Fulton, ‘Do you want one?’ Rufus said ‘Yes,’ pending the approval of his board. [Lancaster Newspapers President and CEO] Jack Buckwalter said the same thing. I asked everybody. LGH [Lancaster General Hospital], I forget who was there representing them at the meeting, but he said ‘Yes,‘ too. Susquehanna Bank said, ‘No.’ Dale [High] wanted three shares. When I announced at that meeting that I had the funding worked out to buy the building, I looked like the ‘Cheshire Cat’; the place went nuts. It just worked out that Dale, Jack and Rufus would make the deal. They were very committed to it, and they were patient investors”

“And let me say something,” Smithgall adds. “I know what Robert Fields [sic] and Ron Harper say about these people; they [High, Buckwalter, Fulton] were involved in this project only to help the city. That’s only reason they did it. Bon-Ton was going to put the building up for auction and we were all concerned that it would be an empty lot owned by an out-of-town owner who didn’t care about the city. We weren’t going to let that happen.”

In a January 18, 1998 front-page Sunday News article announcing the agreement, Lancaster Alliance founding member, future Penn Square Partner, Fulton Bank CEO and President, Rufus Fulton, said about the deal, “Charlie really got it off the dime. He really got it going.”

During his campaign for mayor, in the summer and fall of 1997, Smithgall closely aligned and involved himself with the powerful Lancaster Alliance and its subsidiary organization, Lancaster Campaign, and their influential, widely publicized and promoted LDR International study, know as the Winterbottom Report.

After his November 1997 election, in a pre-inaugural, late December interview with the Lancaster New Era, Smithgall told reporter, Bernard Harris, that his administration would have a “Very cooperative” relationship with the Alliance and Campaign, adding, “The campaign, through the study conducted by LDR International, they’re going to come up with our vision. It’s up to the mayor to implement it.”

On the surface, Smithgall would seem an unlikely point man for a project of this magnitude. A McCaskey High School graduate, class of 1963, Smithgall earned a degree from the Philadelphia School of Pharmacy five years later, and joined the family company as a pharmacist. He married Debbie in 1972. They had one child, a daughter, Allison, in 1979. (Until 2008, the Smithgall’s owned and operated two pharmacies in the city. They closed the Columbia Avenue business in that year).

Although Charlie Smithgall had never run for public office before running for mayor of Lancaster, he was hardly unknown in the minds of the people of the city and county of Lancaster. For about twenty years prior to becoming mayor, Charlie Smithgall was featured prominently at least once annually in one of the Lancaster Newspapers.

Smithgall, a Civil War enthusiast who appeared in the 1993 film “Gettysburg“, is also an antique cannon collector. He currently owns about 40 of the artillery. And they work. Each year, Long’s Park, a city-owned property, holds an annual Fourth of July celebration. Smithgall’s cannons were a featured part of the festivities. Smithgall exploded his 12 cannons during the symphonic playing of Tchaikovsky’s epic 1812 Overture. Smithgall and his volley cannon fire were always a highlight of the performances and the portly apothecary clearly reveled in the attention.

Smithgall had also been increasingly involved in local politics, just not as an elected official. During the 1990s, he was part of the leadership of a group called the Northwest Neighborhood Association which opposed, among other things, a trolley proposal for Lancaster that was backed by Mayor Stork. Smithgall was also a Republican committeeman.

With his colorful, gregarious personality, a recognized, solid family business and a shrewd and canny native intelligence that enabled him to make deals with all kinds of people, Charlie Smithgall was a natural politician. At an early fundraiser/rally, Smithgall allowed donors to fire his cannons on a farm he owned in Drumore Township outside of town. A highlight that day was blowing up a Plymouth by cannonball fire. Four hundred people showed up at the gathering, and Smithgall raised several thousand dollars.

Smithgall’s impressive landslide election victory (52 to 36 percent over his Democrat opponent) was as much a testament to his innate political skills, as his weaker-than-usual political opposition. First, Charlie Smithgall wasn’t Janice Stork, the Democrat mayor who decided not to run for a third term. Aloof and somewhat stiff, Stork was perceived and depicted in the press, as out-of-touch and a poor manager of the city’s finances. The Democrat party candidate, whoever it was going to be, had the burden of being yoked to the Stork albatross.

In the Spring primary of 1997, the Lancaster Democratic party took the unusual action of endorsing two candidates for the mayoral primary. After the vote, the party was left with a rather uninspired (and uninspiring) candidate in attorney, Jon Lyons, who beat fellow Democrat city councilwoman, Billie Jo Herr, in the first cull.

Although Lyons, Smithgall and the Libertarian candidate, Brandon Bello-Santiago, signed a ‘clean campaign’ pledge, there were ugly; Karl Rovian’s revelations about Lyons during the latter part of the campaign of October, 1997. It was revealed, for example, that Lyons was arrested twice. Lyons also refused to answer whether he had ever taken illegal drugs at a public forum. At the same debate, Charlie Smithgall said he had not. There were unsubstantiated (but denied) whispers the source of the information about Lyons was the Smithgall campaign.

Smithgall also had the organized support and financial backing of the Republican local political establishment: Congressman Joe Pitts, State Senator Gibson Armstrong, House Appropriations Chairman John Barley, and two of the three Lancaster County Commissioners Paul Thibault and Terry Kauffman. All publicly backed Smithgall. Pitts and Armstrong even held separate fundraisers for Smithgall. Charlie Smithgall was able to control the political debate, focusing on reducing crime, re-hiring firemen fired under Stork, offering free Saturday city parking, and . . . saving the Watt & Shand building.

At the time Penn Square Partners was officially incorporated, in February of 1998, the development plan as laid out by Winterbottom’s study was still considered the blueprint for the city, at least by Mayor Charlie Smithgall. That plan called for a “conference center” to be built at Lancaster Square, adjacent to the existing Hotel Brunswick.

The Brunswick was (and is) a nondescript brick building built in the early 1970s (then with a Hilton flag) that replaced yet another stylish Beaux-Arts style building, designed by C. Emlen Urban. The original was commissioned as the Brunswick Hotel. The new, mundane Brunswick adjoins a multi-level parking garage on one side, and the mostly vacant, notoriously ugly concrete slab known as Lancaster Square on the other.

The existing Brunswick did have one clear advantage over other downtown sites: it was already built. Renovation would cost less than razing a city block and building anew. Lancaster Square and the Brunswick could handle a “small conference center,” as proscribed by Winterbottom. As Spring 1998, blossomed in Lancaster, Charlie Smithgall had every intention of following Winterbottom’s recommendations exactly, including putting a “conference center” at Lancaster Square.

“The idea has been planted. Now we’ll see if it will grow,” Smithgall said on March 28 in the Lancaster New Era.

But something derailed the Brunswick/Lancaster Square siteing for the center. Charlie Smithgall explains:

“I tried so many times to speak to the [Philadelphia-based corporate] owners of the Brunswick,” says Smithgall. “I tried to call them directly and I told their guy here, [G&F Management executive, Daniel] Logan that I was trying to reach the owners, and no one called me back. Finally, it was time to move on.”

At that point, the project moved to Penn Square and state money, tens of millions of dollars of it, became available for the center … and then it really changed.

Oh, a reminder. It was the same Daniel Logan who later collected over a million dollars from the LCCCA for which there was little work product and under rather mysterious circumstances!

By Christiaan Hart-Nibbrig

(Fifteenth 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 three of the 12 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 bank, Fulton Financial Corp. – was about to name the new company, Penn Square Partners . . . and it would be the start of something really big.

The Lancaster Alliance, through its subsidiary, Lancaster Campaign, commissioned and completely funded Winterbottom’s firm, LDR International, to conduct its report in the summer and fall of 1997.

The close relationship between LDR and the Lancaster Alliance is noted by Winterbottom on page two in the acknowledgements 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 beginning. After the collapse of the HACC proposal, the Bon-Ton company was clear it 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.

(Both Jack Buckwalter of the Lancaster Newspapers and Rufus Fulton of The Fulton Bank, see below, were supporters of the HACC deal. Buckwalter was particularly engaged in those negotiations.)

Immediately after taking office in the first week of January 1998, Mayor Charlie Smithgall stated he wanted the city to buy the historic landmark 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 also 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.

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

High Real Estate, a subsidiary of High Industries, was named General Partner of Penn Square General Corp. – with Lancaster Newspapers and Fulton Financial limited partners, the latter taking a smaller 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 founded the company, then called High Welding, 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 H. High’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 had 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.

Jack Buckwalter, like his father Isaac Z. Buckwalter, who rose to the lofty position of executive vice president of Lancaster Newspapers, Inc., 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 in the family business and, according to a puff piece written about him in 1996 in the Intelligencer Journal, he 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, 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 his status as President and CEO in 1993. Fulton, like Buckwalter, started at the bottom of the company ladder; in his case, as an entry level trust officer trainee, and climbed to the top rung of the bank’s management hierarchy.

Fulton, again 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” and still locating it at the Brunswick in Lancaster Square. Both of those things were about to change.

(Thirteenth in a series)

Starting in 2000 during the litigation and development stages, the Lancaster Convention Center Authority was paying tens of thousands of dollars in legal bills monthly to the Reading law firm of Stevens and Lee that eventually aggregated over $7 million. The statements available to the public and Board members carried no information apart from “For services rendered.”

There ensued requests in 2005 and 2006 from County appointed members of the Convention Center Board, as well as vocal members of the public, to confirm that the invoices were based upon time actually worked on LCCCA business at agreed-upon rates.

Adding fuel to the fire, Stevens & Lee was around the same time involved in a controversy regarding their invoicing on a lump fee rather than an hourly rate for work concerning the sale of the Conestoga View Nursing Home; the fee itself surpassed the hourly rates that the County had agreed to pay. (Technically, the fee was paid by the purchaser.)

There was also a great concern among minority members of the Board and others that the LCCCA was either carelessly or willfully overpaying counsel. These Board members were so upset about the billing information being withheld that they requested an investigation from the District Attorney.

In response, Chair Ted Darcus ruled that additional information concerning billings would not be made available so long as litigation was on-going.

Upon the resolution of legal disputes in early 2009, NewsLanc made a “Right To Know” request of the LCCCA for copies of Stevens & Lees invoices. Invoices from 2005 on were received, properly detailed as to who performed the work, the date, the amount of time spent (down to ten minute intervals!), the subject and the hourly rate. For all practical purposes, billings were consistent with the annual contract terms.

From another source, NewsLanc also obtained a copy of a report entitled “Qualitative Review of Legal Services by Stevens & Lee for the Convention Center Project In  Lancaster County, Pennsylvania” by Pennsylvania Chief Justice Emeritus Stephen A. Zappala, circa July, 2007.  At that time, former mayor Art Morris, was the Chair and Acting Executive Director. Morris told NewsLanc that this report “was compiled at Stevens & Lee’s instigation and cost.”

In the report, Chief Justice Zappala states:

The billing statements submitted to the Authority by Stevens & Lee have been subjected to a quantitative review by accounting professionals.  The firm examined each of nearly 300 invoices and over 9000 time entries submitted by Stevens & Lee in its representation of the Authority.  The report by these accounting professionals concluded that Stevens & Lee’s billing entries were tied to the time records, were properly calculated by reference to the agreed-upon hourly charges and support the invoices remitted to the Authority.

The Authority derived significant benefits from the professional services rendered by Stevens & Lee.  The amount of fees charged by Stevens & Lee was commensurate with the highly-developed professional skills and standing of the attorneys who performed those services….

I have determined that the fees were fair and reasonable, and in conformity with Rule 1.5 of the Rules of Professional Conduct.

Zappala describes how, by mutual consent and with appropriate waivers, Stevens & Lee represented the City, the County and the Authority in litigation and a variety of complex lobbying and legal matters related to the development of the project with the Authority paying for all of the legal services from the newly imposed Hotel Room Sales Tax.

In response to an inquiry from NewsLanc of why invoices prior to 2005 had not been delivered, Morris responded:

The July 26, 2007 cover letter further references the fact that the accounting firm reviewed the detailed invoices ’supporting all of [Stevens & Lee's] billing for legal fees during the engagement’, ‘over 300 invoices’.  It also references the practice of having Stevens & Lee maintain the detailed invoices at its offices, where they would be reviewed and approved by the Authority Chairman, Treasurer and/or Executive Director each month, and after review, summary monthly invoices were submitted to the Authority for approval by the Board. This statement is consistent with my understanding that other than the detailed invoices recently obtained from Stevens & Lee and produced to you in response to your RTK request, the Authority is in possession of the summary monthly invoices from Stevens & Lee and that Stevens & Lee continues to possess the detailed invoices.

NewsLanc and its publisher Robert Edwin Field regret having raised suspicions concerning the appropriateness of Stevens & Lee invoices. Yet Art Morris at the time had also urged that the detailed invoices be made available for verification in a Sunday News column.

Executive Director Dave Hixson and Chair Ted Darcus had disdainfully refused to address the legitimate concerns of minority board members and the public. The matter could have been put to rest in a couple of hours by inviting a minority member of the Board or perhaps a retired judge to visit the law offices and verify that past invoices were in appropriate order. Perhaps Darcus made such a gesture in private but, if so, the public was not so advised. Darcus’ refusal to accept questions from the audience, and his use of the City majority on the Board to squelch serious discussions and ram through contracts, further exacerbated matters and enhanced suspicions.

On May 3, 2009, Field wrote to express his thanks for the LCCCA’s cooperation and Morris’ response to questions and concluded by saying: “I feel as though I have some egg on my face. However, in this case, my anger is not at myself but at those arrogant individuals who thwarted transparency every chance they had. I guess the habit of concealing truly devious matters just became a way of life.”