Posts Tagged ‘lccca series’

Chapter Twelve: The Rift over the TIF

Posted on May 4th, 2009

Chapter Twelve: The Rift over the TIF

(Twelfth in a series)

“It wasn’t my money we were talking about. It was the people’s money, and I owed it to them to understand it before voting on it.”

  • Dick Shellenberger, Chairman Lancaster County Commissioners, explaining his request for details of the Tax Increment Financing (TIF) proposal before his board would take a vote, February, 2005.

During the first frigid weeks of the Lancaster winter of 2005, Nevin D. Cooley, president of Penn Square Partners (PSP), was quietly going around town meeting with Lancaster’s elected officials, paying particular attention to the board members and solicitors for the School District of Lancaster (SDL). Cooley wanted to discuss a financing proposal for the hotel his partnership was supposed to build next to the convention center.

For years, the sponsors of the project had touted the tax revenue its “privately-owned” Marriott Hotel would bring to city tax coffers.

Now, during those frozen early days of 2005, PSP turned its attention to the funding of the hotel, and Nevin Cooley was the man to pitch it. Cooley, a University of Maryland-educated native of Lancaster County, had been Dale High’s right-hand and principal spokesman for more than a decade. The portly, bearded Cooley was most often the face and voice of Penn Square Partners. Cooley’s proposal to the county, city and school board officials was a complex scheme called a Tax Increment Financing (TIF) plan.

Tax Increment Financing (TIF) is a device used in many states whereby theoretical future gains in taxes from a project are anticipated to finance a new project. Relevant local taxing bodies must consent to the TIF plan. The taxing bodies in Lancaster would be the County Commissioners, City Council, and the School District of Lancaster.

The proposed Penn Square Partners TIF called for the SDL to re-direct 90% of the school real estate taxes it was to receive from the hotel to pay down the hotel mortgage bonds. Full tax payments would be available to the school district in 20 years when the mortgage bonds would be paid off, according to the PSP plan. If certain return on investment – 12% – was exceeded during the TIF period, the Partners tax payment would increase.

Mike Winterstein was the self-described economic development “point-person” for the school board, to which he was elected in 1997. A conservative Republican businessman, Winterstein owned many properties around the city, and found himself increasingly involved in city politics.

“I remember meeting with Nevin Cooley along with [fellow board member] Dan Desmond, who was also involved in economic policy matters,” said Winterstein. “Desmond said we wanted to have the partners pay 50% of the taxes. I wanted it all to be taxable. My feeling was that the schools needed money, and that economic growth would only come with taxable economic growth. I wanted the hotel to be entirely taxed as a private business.”

Winterstein and Desmond went back to their board and explained the proposal. The board was not supportive of the TIF plan.

“Although we were Democrats and Republicans on that board, we really shared the same vision about the tax revenue,” said Winterstein, “We needed all of it. We saw the tax revenue as the cornerstone of economic development. We simply weren’t buying the Penn Square Partners’ plan. They wanted a 90/10 split in their favor!”

“Also,” continued Winterstein, “Cooley was using this market study that didn’t reflect the project we were discussing. I was through with his spewing nonsense.” (The convention center size had increased from 61,000 sq. ft. to more than 100,000 sq. ft. since the time of the market study.)

In a letter to the president of the school board, Patrice Dixson, Cooley based his argument on a market study, which he incorrectly, and repeatedly, characterized as a “feasibility” study. It was later certified that the study was, in fact, a market study, not the much more comprehensive ‘feasibility’ study which projects revenues and expenses, profits or losses, and also includes a market analysis.

Another prominent businessman who attended one of the TIF pitches recalled:

“[Lancaster Newspapers CEO] Jack Buckwalter came to the meeting, and they gave a superficial power point presentation,” said the businessman who spoke on condition of anonymity. “What they were saying didn’t answer a lot of questions, so we asked for more details. And, as usual, they never provided anything in writing.”

Like the campaign around the Interstate Hotel management vote, sides on the TIF issue were vocal and clearly drawn.

On the side of the Penn Square Partners, all three Lancaster Newspapers editorialized in favor of the TIF. The Lancaster Alliance — of which all three Penn Square Partners were founding members — showed up at meetings urging its adoption.

Opponents were, predictably, the Greater Lancaster Hotel and Motel Association (GLHMA) plus ‘in-your-face’ activist Ron Harper, and a growing miscellany of citizens. But the issue also caught the attention of the Lancaster County Board of Commissioners.

The three-person Commissioners’ board had taken office a year earlier. In January, Dick Shellenberger had replaced Pete Shaub as chairman, much to Shaub’s dismay and disappointment. Unlike Shaub, who was a staunch supporter of the convention center project, Dick Shellenberger was more questioning of its viability. Henderson had similar questions of feasibility.

Dick Shellenberger was a fiscal and socially conservative commissioner who campaigned on a platform of smaller government. The commissioner’s job was Shellenberger’s first elected office. He said that he didn’t sufficiently understand the TIF proposal. If the School Board passed the TIF, then the County Commissioners and City Council would also have to vote on it.

Shellenberger asked for details. “They [Penn Square Partners] would not provide them,” said Shellenberger. “It wasn’t my money we were talking about, it was the people’s money, and I had to understand how it was going to be spent.”

The Republican-dominated City Council, led by outspoken project supporter, Council president Stephen Diamantoni, was very supportive of the TIF, along with perhaps the project’s most ardent supporter, Mayor Charlie Smithgall.

According to a New Era article of February 16, 2005, “Penn Square Partners would also give the school board a 2-year binding agreement that would pay the district a lump sum of $100,000 a year in lieu of taxes”, which  S. Dale High later said had been increased to $150,000.

Public sentiment strongly opposed the TIF. According to an Intelligencer Journal poll published March 12, three days before the School Board vote, 93% of respondents opposed the plan.

A few days before the SDL board took official action, a special public meeting was held at the Edward Hand Middle School. Dale High and Nevin Cooley and other associates detailed the proposal before several hundred people. Wearing a gray suit and speaking in a monotone, High recapped his past achievements. Of his twelve minute presentation, less than two minutes was devoted to discussion of the TIF. The bulk of his remarks attacked opponents and promoted the ‘blue-sky’ projections of his partnership.

The SDL vote itself on March 15 at McCaskey High School was a strong rejection of the Partners’ plan. In a 7-1 vote (with one abstention), the School Board refused to back the TIF.

To read Lancaster Newspapers’ reports immediately after the TIF vote, one would’ve thought the defeat was fatal to the project.

“Supporters of a downtown Lancaster hotel and convention center on Thursday pulled the plug on a tax relief plan they said was needed to support the project. And the center project remains barely alive today,” read a New Era article after the vote.

Said Penn Square Partner and Lancaster Newspapers CEO, Jack Buckwalter: “We are very disappointed. Over the past seven years, we have made our best efforts to bring the Watt & Shand building back to life. It appears that we cannot proceed under the conditions as set by the school board. So the project very well at this juncture could die.”

Dale High released a written published statement two days after the ‘Ides of March’ school board vote. “We have stopped all work on our portion of the project, effectively immediately.”

High immediately instructed his construction company to remove all signs from the Watt & Shand building promoting the project coming soon.

“We made it clear that this is our best offer,” said Nevin Cooley following the meeting. “There is nothing more that we can do. If I could have offered something different, I would have. We can’t go forward and the community and the taxing authority will continue to have a building that is empty and deteriorating and not generating anything in new taxes. . . . There is no ‘Plan B.”

But that was not true. There was indeed a ‘Plan B.’ The sponsors had it ready to go, and it was something the newspapers had already reported. Penn Square Partners would not wait long to unveil it . . . again.

In a front page story on December 17, 2004 – three months before the SDL vote on the TIF – the Intelligencer Journal published an article (“City to buy Watt & Shand”) outlining a plan by which the city of Lancaster, via one of its municipal authorities, would purchase the landmark building from Penn Square Partners.

The article, by Dave Pidgeon, describes an agreement whereby the Redevelopment Authority for the city of Lancaster (RACL) would buy the building from Penn Square Partners, then lease it back to the Partners, who would then have an option to re-purchase the building in 20 years.

Unlike the TIF proposal to the SDL, the RACL plan would completely exempt the hotel from property taxes, and would no longer come with an offer by PSP to contribute annually to the SDL in lieu of property taxes.

It would also allow the City of Lancaster, through RACL, to apply for an annual grant through the state’s Department of Community and Economic Development (DCED), which would rebate to PSP an anticipated million dollars of annual state sales tax generated directly or indirectly by the convention center project.  (Eventually the rebate was pledged to service a $14 million loan from Fulton Bank.)

Mike Winterstein, the school board member who would soon vote on the TIF, remembered Mayor Charlie Smithgall lobbying him during the weeks before the school board vote: “I recall the meeting very well,” Winterstein said. “Smithgall is trying to get us to pass their [Penn Square Partners'] TIF and he says, ‘Well, if you don’t do it, we’ll just take it off the tax rolls.’ I couldn’t believe it.”

During the twelve days following the school board vote on March 15, 2005, the project was described in moribund terms. Its miraculous ‘resurrection’ is a study in media manipulation and deception on the part of project sponsors:

On March 22, Rep. Mike Sturla, another ally of the project in Harrisburg said to the New Era after a revised TIF proposal to the school board was made: “We’ve unloaded our tool box. This is the end.”

Three days later, March 25, the Intelligencer Journal virtually pronounced the project dead.  Disarray hits Penn Sq. plans/Leaders halt tax deal negotiations, the headline read.  The article struck an ominous tone.

“Plans to build a luxury hotel and convention center on Penn Square suffered another blow Thursday night, when hotel developer Penn Square Partners ended attempts to obtain property tax breaks for the project.

The partnership had said it needed millions in property tax abatements from City Council, county commissioners and the School District of Lancaster board to build the 300-room Marriott Hotel.

“The collapse of negotiations concerning the tax deals places the status of the hotel and adjoining convention center in doubt.

“‘We’re out of time,’ said state Sen. Gibson Armstrong, one of the chief proponents of the project. ‘It’s impossible to pull everything together.’”

The next day, on Good Friday, March 26, the Intelligencer Journal reported that a $22 million funding gap may doom the project.  “A $22 million funding gap that first surfaced in early 2004 continues to threaten the proposed downtown hotel/convention center,” the article began.

Nevertheless, on Monday March 28, 2005, one day after Easter Sunday, Lancaster County citizens read that the project proclaimed to be “dead” only days before had been miraculously resurrected.

HOTEL PLAN RESCUED, exclaimed the Lancaster New Era in its headline.

The article begins, breathlessly:

“Skip the school board. Forget the county commissioners’ 57 questions.

“The Lancaster City Redevelopment Authority this morning unveiled a new way to finance – and keep alive – a proposed 300-room convention center hotel on Penn Square.”

As it turned out, what the sponsors “unveiled” was not “a new way to finance — and keep alive” the hotel. Rather, it was in fact a “Plan ‘B’” that was far more favorable to PSP than what they had presented to the SDL. And it was the exact plan that one of Jack Buckwalter’s newspapers reported on in detail three months prior.

In the ‘new’ financing scheme, not only would the SDL receive zero real estate taxes whatever for twenty-years, but the offer of “$150,000″ in annual payment  that Dale High for PSP had “agreed to guarantee” was now gone.

The TIF and RACL proposals awakened the public, and opened a new front of opposition.

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Chapter Thirteen: Shellenberger and Henderson move into the crosshairs

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Chapter Eleven: Ties that Bind: The old board shackles the new

Posted on May 4th, 2009

Chapter Eleven: Ties that Bind: The old board shackles the new

(Eleventh in a series)

Lancaster County Commissioners Paul Thibault and Ron Ford had very good reason for passing the controversial convention center county bond guaranty just before the midnight hour of their terms. The two lame duck commissioners who voted for the guaranty in the week before the November, 2003, general election were aware that if they didn’t get it done then, there would be no county guaranty under their successors.

Thibault and Ford were aware of this because the majority of what would be the next board of County Commissioners was on-the-record opposing the county guaranty. Both Republicans, Shaub and Dick Shellenberger, said unequivocally they were against county bond backing. Of the other three contenders for the minority seat, Democrat Molly Henderson and Constitution Party candidate, Jim Clymer, similarly opposed the guaranty. Only Bill Saylor, the underdog Democrat, was non-committal on the issue.

If the Lancaster County Convention Center Authority (LCCCA) was going to borrow $40 to $50 million to construct a convention center, it needed Lancaster County and its AAA credit rating to guarantee the loan to qualify for a low interest rate and to maximize borrowing. Without it, according to the Authority, the LCCCA could only borrow half that amount. Given the candidates’ stated opposition to the county backing, it was clear the current board must pass the guaranty while still in office and it had the opportunity.

The October 29 vote and public meeting provided high drama for Lancaster County. More than 80 people crowded the Commissioners’ chambers on the fifth floor of the courthouse, many spilling out of the room. It was six days before the general election, one day after the formal request to the county by the LCCCA to guarantee the bond, and two weeks after introducing the issue to the public by hiring bond counsel to look into the guaranty.

Many of the Lancaster’s political power elite were in the audience, most in support of the county guaranty.

“If you do not do this [guarantee the bond], you might as well drive a stake through the heart of Lancaster City,” said Rep. Mike Sturla to the Commissioners.

Former Lancaster city Mayor Art Morris commented, “It bothers me that so many people stand up and try to throw things to try to kill the project. This [guaranty] is not unusual. It is elementary. It shouldn’t be a surprise to anyone in government. It shouldn’t be a surprise to the commissioners. There is no financial reason to oppose this. You can’t be afraid of your own shadow.”

The Authority’s financial advisor, Tom Beckett, said the county’s hotel room tax revenues would cover the estimated annual debt service even if the bonds were called. In the worst case, said Beckett, the complete failure of the convention center would cost between $2.66 to $2.76 per resident, per year, for the life of the bonds.

Lancaster mayor Charlie Smithgall seized on Beckett’s language in typical fashion. “That $2.66 is less than a Happy Meal,” said the fast-food loving Smithgall.

Jim Clymer attacked the hotel room tax, telling the Commissioners it was “fundamentally unfair to impose a tax on an industry that will finance its opposition.”

When the vote came, Republican Chairman Thibault, and Democrat Ford, voted to back the bond. Pete Shaub, who was about to be re-elected, voted against the ordinance, number 73.

The following Tuesday, November 4, Dick Shellenberger, Pete Shaub, and Molly Henderson were elected to the board of Lancaster County Commissioners. Jim Clymer garnered an impressive 18,000 votes. Shellenberger was the leading vote-getter, with more than 41,000 ballots in his column.

A few weeks after the election, before the county-guaranteed $40 million bond agreement was finalized, Commissioner-elect Molly Henderson’s husband, Alex, was allegedly confronted on Queen Street by Lancaster Newspapers Chairman, Jack Buckwalter. Mr. Henderson was the managing partner of a prominent Lancaster law firm. He and Buckwalter knew one another, were professional acquaintances, and sat on some of the same boards of directors.

According to Henderson, an agitated Buckwalter berated him because of his wife’s position on the county bond guaranty.

So why were Convention Center Authority sponsors, like Buckwalter, concerned about the incoming board and its position on the guaranty? Wasn’t it a ‘done deal?’

The answer can be found in a buried subsection of the enabling legislation, the 1994 Third Class County Convention Center Authorities Act, which reads:

If and to the extent that the authority pledges its share of the proceeds of the tax authorized by this section as security for the payment of bonds issued by the authority for convention center purposes, the Commonwealth does hereby pledge to and agree with any person, firm or corporation subscribing to or acquiring bonds to be issued by the authority for convention center purposes that the Commonwealth itself will not, nor will it authorize a county to, reduce the rate of tax imposed for convention center purposes until all bonds so secured by the pledge of the authority, together with interest, are fully met and discharged,”

–16 P.S. Chapter 1; Article XXIII; (n) Third Class County Convention Center Authorities; Section 2399.23; subsection (f)

The $40 million Citizens Bank construction bond, although guaranteed by the commissioners, would be a debt of the Convention Center Authority. And, according to governing Pennsylvania law — the Convention Center Act of 1994 — until that debt was “fully met and discharged,” including interest, there appeared nothing any subsequent board of commissioners could do about lowering or abolishing the tax.

Thus, as long as the majority of the LCCCA Board was unwilling to repay the relatively small amount drawn down (closing fees and $18,000 per month in ‘negative arbitrage’), the incoming County Commissioners would be prevented from reducing or rescinding the hotel room rental tax, and therefore killing the convention center project.

The net result of the county guaranty and the issuance of the LCCCA bond effectively tied the hands of the new board of Commissioners unless and until the LCCCA Board arranged to pay off the bond.

Howard Kelin was hired in 2006 by the County Commissioners as Special Counsel to represent them against a suit brought by the Convention Center Authority. In the County brief filed with the court, Kelin writes of the 2003 guaranty and the speedy issuance of the bond in the waning days of the Thibault board:

The county believes the 2003 financing was ‘fake financing,’ engineered to create debt to which the former lame-duck board of commissioners could adhere the County’s guaranty and to subvert the right of future Commissioners to consider and decide whether county taxpayers should guarantee financing for the project…”

There is disagreement about whether later boards of Commissioners would have the standing to revoke the guaranty and reduce or modify the room tax. There is precedent in Pennsylvania law with the courts setting aside similar actions when challenged by their successors.

In the leading case, Lobilito, Inc. vs North Pocono School District, [562 Pa 380, 755 A. 2d 1287 (2000)], the Pennsylvania Supreme Court concluded that ‘lame duck’ elected officials could not artificially bind the hand of its successors.

In Lobilito, a construction company, Lobilito, had entered into a construction contract with the North Pocono, Pa, school board. The newly-elected incoming school board opposed the controversial project. When the new board took office in 1994, they disavowed the construction contract. Lobilito filed a breach of contract suit against the North Pocono School District.

The Pennsylvania Supreme Court ruled that the newly elected board could disavow the contract of the previous board because it was inappropriate to ‘hamstring’ its successor board:

With respect to those agreements involving municipal or legislative bodies that encompass governmental functions, we have repeatedly held that governing bodies cannot bind their successors.

“…The obvious purpose of the rule is to permit a newly appointed governmental body to function freely on behalf of the public and in response to the governmental power and body politic by which it was appointed or elected, unhampered by the policies of the predecessors who have since been replaced by the appointing or electing power.  To permit the outgoing body to ‘hamstring’ its successors by imposing upon them a policy implementing and to some extent policymaking machinery, which is not attuned to the new body or its policies, would be to most effectively circumvent the rule.”

–Lobilito, Inc vs North Pocono School Disrict, 562 Pa 380, 755 A. 2d at 1289-90

One Lancaster attorney, who has worked on governmental issues concerning the county (and who spoke on condition of anonymity), said that because a judge later found that the passing of the bond guaranty was a “proprietary” rather than a “governmental” action, that guaranty couldn’t be reversed “whether the new commissioners waited a year or two, or whether they did it the first day in office.”

Another Lancaster attorney with decades of experience in municipal law (who also declined to be identified) disagreed, arguing that challenging the guaranty immediately might have made a significant difference in revoking it.

“Proprietary?” said the second attorney. “There were no architectural designs completed. Construction was years away. The financing was not secured. The public didn’t want it. I think it [the guaranty] could’ve been challenged and perhaps reversed. But there weren’t the votes on the board to do that at the time.”

He was right. The next board was not then interested in overturning the guaranty, or stopping the project at all. All three said they supported the project, and one of them was adamant that it get done sooner rather than later.

Despite being known for its Amish or “Plain” population, the players who occupy the political stage in Lancaster County are anything but ordinary.  From bellicose Mayor Charlie Smithgall, to his aloof, bow-tie-wearing successor, Rick Gray, to attention-loving “official observer,” Ron Harper, Jr., to pie-tossing LCCCA chairman, Jim Pickard, the place has its complement of eccentrics. But perhaps the wildest of all these unwieldy personalities was Howard “Pete” Shaub, Jr.

Pete Shaub was the former marine, auctioneer, building executive, and only incumbent candidate for County Commissioner. Shaub had a mounted sword above his desk in his office on the fifth floor. The sword reflected Shaub’s combative style.

It was during his first term, from 1999-2003, his first-ever elected position, where Shaub got his reputation for unpredictability and abrasiveness. He often clashed with the other Commissioners, including fellow Republican, Paul Thibault.

Immediately after being sworn into office, in January, 2004, the new board voted to name Pete Shaub as Chairman. At the time, Shellenberger had no electoral experience, and didn’t have qualms about the vote.

“I was learning the job,” Shellenberger said after his term ended. “Pete had the experience. At that point, early in the term, we could work with Pete. It didn’t get bad until a little later in the year.”

The problem, later called “chaos” in the courthouse, was that many people couldn’t “work with” the combustible Shaub. Known for his insult-laden explosions, Shaub had alienated his own party to the extent that it declined to endorse him in his re-election bid in 2003.

“I can’t trust him,” said Jere Swarr, a former Rapho Township supervisor, Republican committeeman, and former candidate for Commissioner. “You know how on your report card there’s a grade, ‘works well with others’? Pete got a report card, ‘He does not work well with others,’”

One former county employee who worked in the Commissioners’ office, remembers Shaub’s frequent screaming fits, once banging his head on a table during a meeting when advised the meeting might be in violation of the Sunshine law.

Shaub, according to another former county employee in the Commissioners’ office, demeaned nationally renowned city planner, Ron Bailey, into resigning. “Shaub badgered, and badgered, and badgered that man until he quit,” said the former employee. “Shaub couldn’t handle another person taking his thunder. Ron Bailey was an asset to the county.”

Pete Shaub was a former construction boss. And as a man used to getting projects completed, he was upset at the pace of construction of the convention center.

“Pete was very concerned that the center was delayed for so long,” remembered Shellenberger, of the first months in office. “This was his construction background. He set timetables with the Authority and private partners to get things done. He wanted to move it [the project] along.”

Shaub gave the LCCCA a deadline of September 7, 2004 to complete the architectural designs for the hotel and convention center project.

Penn Square Partners had selected Atlanta-based Cooper Carry, Inc. to design the project. It was at a Commissioners’ meeting when a clearly perturbed Shaub publicly called out the private partners, Penn Square Partners.

“Nevin,” a clearly exasperated Shaub said to the Penn Square president, Nevin Cooley, “I ask you, are we going to draw drawings?’”

Cooley, longtime spokesman for High Associates, responded, “When we have a signed agreement on the King Street Garage,” referring to a pending contract between the Authority and the Partners regarding control of the King Street facility adjacent to the proposed project.

Shaub retorted sarcastically, “That is just an excuse. Folks, we have a very short time and very short lives. It’s time for Penn Square Partners to fulfill their end of the bargain so we can have those schematic drawings done by Sept. 7. We are behind as it is.”

Shaub’s behavior was not only upsetting those working around him. Sponsors of the convention center project and some of its key supporters — like Sen. Gibson Armstrong and Rep. Sturla — were publicly rebuking Shaub for making it more difficult to keep the project going.

This was a rare occurrence of the private Penn Square Partners getting resistance from its public partners. There would be more.

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Chapter Twelve: The Rift over the TIF

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Chapter Ten: The ‘bumpy ride’ of Commissioners Shellenberger, Shaub, and Henderson

Posted on April 30th, 2009

Chapter Ten: The ‘bumpy ride’ of Commissioners Shellenberger, Shaub, and Henderson

(Tenth in a series)

I am very much in favor of the convention center. But I do not support the county bond. The convention center must be self-supporting.”

Molly Henderson, a week before her election as Lancaster County Commissioner, October, 2003

“I am behind the convention center. However, I am opposed to the county insuring the bond,”

– Dick Shellenberger, a week before his election Lancaster County Commissioner, October, 2003.
County Commissioner campaigns in Lancaster usually follow a predictable pattern.

Every four years, sometime during January, candidates file papers with the county election board to appear on the May primary ballot. They and others then spend the next several weeks gathering signatures on petitions to qualify for the spring election.

For the major party candidates – the Republicans and Democrats – their time is also spent lobbying the roughly 300 committee people in each party scattered throughout the vast county for their endorsement votes.

The party endorsements are voted on by the committee members at a conference held at a local hotel at the end of February. The parties normally end those meetings with two endorsed candidates for the May primary. Occasionally, a party will endorse one or three candidates. But, historically, it is usually two who leave with the party’s imprimatur.

The spring primary for Lancaster County Commissioner is the most important election in Lancaster County. Not only does it determine which three (of four) people will eventually administer a $300-plus million annual budget, but also who will staff and oversee the fourth largest workforce in the county. Lancaster County is big business.

County Commissioners are also empowered to impose taxes, as they did controversially with the hotel room rental tax in 1999 to finance the convention center. The job of Commissioner comes with an $80,000 salary (the chairman makes a bit more), comprehensive benefits, a full-time assistant, and all the social prestige a Lancastrian could ever want.

Other major county offices, including the county District Attorney and Judgeships, are also decided in a Commissioners’ election year. In 2003, Donald Totaro, the incumbent District Attorney, who would play a central role in the lives of the next board of commissioners, was the Republicans’ endorsed choice for DA.

Lancaster County’s voting demographics are somewhat peculiar. The great majority of the roughly half a million people are scattered about the county’s mostly rural 940 square miles. About 300,000 of them are registered to vote. In the mostly (95+%) white county, Republicans out-number Democrats almost two to one. In the ethnically mixed, poorer city, where 50,000 people live, Democrats outnumber Republicans by a more than two-to-one margin for the approximately 35,000 registered city voters. (There are also about 5,000 non-Democrat and non-Republican voters in the city.)

Complicating the political calculus is Lancaster County’s enormous size and more than 60 townships, boroughs, and municipalities, some of which have differing and competing local interests, and are run mostly autonomously by regional power brokers and local boards.

After the primary, where about one-in-five registered voters make it to the polls, the top two vote-getters from both parties (endorsed or not) appear on the November general election ballot.

Party-endorsed candidates are able to use many of the party’s resources, including campaign funding subsidies. For example, the parties subsidize mass mailings; very important in a county whose diffuse electorate makes it logistically difficult to knock on all the doors.

Commissioner candidates of both major parties in Lancaster County typically spend the summer before the general election attending corn roasts, chicken BBQs and fish fries, fundraisers, park clean-ups, coffee klatches, canvassing, and picking up political endorsements wherever they can find them.

In September, the yard signs emerge, seemingly overnight, on freeways, street corners, front lawns, windows, blanketing the county with cardboard ‘vote-for-me’ messages.

At a series of fall ‘debates,’ the candidates answer canned questions with canned, over-rehearsed responses, with the same stale jokes and stiff punch lines. The substantive positions on the issues – regardless of party – are virtually indiscernible. All are for reducing taxes, improving schools, preserving farms, revitalizing urban areas, and wiping the chins of senior citizens. The Republicans, invariably, invoke the name “Ronald Reagan” into their remarks.

The candidates hold court at autumn country fairs and march in parades straight from a Norman Rockwell canvas. Letters to the editor from supporters and detractors (often ghost-written) deluge the opinion pages of Lancaster Newspapers.

After the primary, the process is largely rote and ceremonial for the Republican candidates. They know they will win the election and become county commissioners.

For the Democrats, it is very much a political match to the death. The  county’s charter requires that one party can have no more than two members on the three-person County Board of Commissioners. For 150 years this has meant that two Republicans would share the board with one Democrat.

By the first Tuesday of November – without exception – two Republicans and one of the two Democrats are elected to the board. This is how it usually goes.

Although the general election results of 2003 did end with the same two Republicans-to-one-Democrat board composition, that is about the only thing that went according to history during that very weird campaign season.

The 2003 campaign actually began in late 2002, when, in December, eight of the nine final candidates announced their intentions to run in the May primary.

Two of the sitting commissioners, Paul Thibault, the Republican chairman of the Lancaster County Board of Commissioners, and Ron Ford, the Board’s lone Democrat, had indicated they would not seek re-election in 2003. Both Ford and Thibault voted for the hotel room tax to support the convention center in 1999, with Thibault playing a leading role in its passage.

By mid-January, 2003, nine candidates for County Commissioner filed the paperwork to enter the May 20 primary. They consisted of six Republicans and three Democrats.

The Republicans included: Howard ‘Pete’ Shaub, an incumbent Commissioner; Richard ‘Dick’ Shellenberger, a restaurant owner; Dennis Stuckey, the County Controller; James Huber, former four-term County Commissioner; Steve McDonald, County Recorder of Deeds; and Scott Martin, County Youth Intervention Director.

The Democrats fielded: Bill Saylor, a former television newsman; Jon Price, a township supervisor in tiny Clay Township; and Molly Henderson, a college professor and former Lancaster City public health official.

Only Shellenberger was endorsed by the Republican Party, while the Democrats endorsed all three candidates. This was the first indication the race wouldn’t follow strict convention.

Pete Shaub was not endorsed by his own party at the Republican committee endorsement convention in 2003, as he had been four years earlier. In 1999, he had been the top vote getter of all the candidates, beating his running mate, Thibault, by almost 1000 votes.

Shaub, 48, was a fit, charismatic,  nattily dressed, former marine, employed as a construction executive. He also worked as an auctioneer for the family’s auction business.

Shaub had never held elected office before becoming commissioner, though he was Republican committeeman and a state committeeman. Shaub, originally from the southern portion of the county, was a neighbor of one of the state’s most powerful political figures.

I consider Pete Shaub to be a friend,” said Rep. John Barley, the powerful state House Appropriations chairman in 1999, endorsing Shaub.

In Shaub’s four years in office he often clashed with Thibault, and was getting a reputation of something of a tightly-wound, unpredictable official. One night, with his teenage daughter and one of her friends, he was stopped by park rangers at a county park after the park was closed. Shaub’s explanation: they were conducting a Bible study.

Dick Shellenberger, a 57 year-old restaurant owner, had no political experience at all. He belonged to, and was very involved in the Cavalry Church, a large and well-known house of worship in Lancaster County.

Shellenberger, pleasant and gracious, was a social conservative typical for the mainstream of Lancaster County. Tall, with a straight back and a nice head of hair, Shellenberger looked good in a suit. He worked in restaurants all of his life, and recently owned a local eatery with his wife, Pam.

Shellenberger was something of the darling of the party in 2003. He raised the most money and got the most votes. He even drew the top spot on the ballot for the May primary, which was a random draw. His campaign events were accompanied by songs like “This Land is your Land,” and “God Bless America.” He came with the GOP endorsement, and everyone seemed to like ‘Dick’.

Dennis Stuckey, 50, was the County Controller in 2003. Bland and portly, Stuckey generated little enthusiasm in the party. He was supported, however, by GOP leaders such as Lancaster Mayor Charlie Smithgall and current Commissioner Paul R. Thibault, two of the convention center’s most ardent advocates.

James Huber was a 68 year-old a former four-time commissioner (1987-1995), was attempting an unlikely (and unendorsed) comeback. This was Huber’s second comeback, and his bid was looked upon as a long shot.

Steve McDonald, 39, the county Recorder of Deeds, was also a social conservative in the crowded field. Blow-dried, with a sunlamp tan, McDonald’s style didn’t resonate with the rank-and-file county Republican voter.

The last Republican commissioner candidate was Scott Martin, 30, who was a full-time director in the county’s Youth Intervention Center. A former football player in the Arena League (and very briefly affiliated with the NFL’s NY Giants), Martin was considered a farfetched candidate. In March of 2003, Martin had to explain the embarrassing revelation that he was actually a registered Democrat. He called it a “mistake,” and denied he was an actual Democrat.

For the Democrats, Molly Henderson, 49, was a local Millersville product. She was a state and local committeewoman who formerly headed the city’s Environmental Health and Protection Unit in the Smithgall administration. Henderson, who earned a doctorate in Public Health from Temple, though without electoral experience, was a confident and energetic candidate, and indefatigable campaigner.

Henderson was able to collect a broad range of support which reached across the aisle and included John S. Shirk, former Republican Manheim Township Commissioner and committeeman. Her campaign co-chairman (an honorary but significant post) was outgoing commissioner Ron Ford. (Ford was also the honorary chair of another candidate, Jon Price.)

In addition to the Lancaster Democratic Committee endorsement, Henderson was also supported by Rep. Mike Sturla (D), the Lancaster United Labor Council, and the AFL/CIO.

Henderson ran for the Democratic nomination in 1995, and lost a close race to Ford and Saylor.

“I am not afraid of controversy,” Henderson said during the 2003 campaign. “I stand up for what I believe, even when my job is at stake.”

Bill Saylor, tall and still handsome at 74, was a former WGAL-TV on-air news personality, and was running for the third time for the post of County Commissioner. In 1999, he lost to Ron Ford, by fewer than 200 votes. Diffident and aloof, Saylor, also of Millersville, had a difficult time having people warm up to him.

Finally, there was Jon Price, a boyish 33 year-old Clay Township supervisor. Price was from a politically active and well-known local family, but was seen as the dark horse in the three-person field.

Before the primary, the positions of all the candidates regarding the convention center project can only be described as uniform and positive toward the project. Here is what the contenders said prior to the primary on the issue:

SHAUB: “Lancaster County should support the downtown convention center and hotel.”

SHELLENBERGER: “The hotel tax provides revenue for our visitors bureau, which in turn, if used wisely, will attract more tourists to the county.”

SAYLOR: “The worst thing possible would be for the convention center to be built then fail.”

HENDERSON: “The community accepted this project years ago. Dozens of revitalization projects—public and private—are based upon its completion.”

The rest of the candidates supported the project unreservedly.

The temperature on primary election day, May 20, 2003, was mild, with a temperature reaching the mid 70s. Election officials reported a voter turnout of 21 percent among the county’s registered Republicans and Democrats. A total of 49,630 ballots were cast on that day.

When the votes were counted, Dick Shellenberger had the collected the most, with 21,823 votes. Pete Shaub garnered 15,465, for second place and his name as one of two Republicans on the November ballot. Shaub had more than 4,000 votes more than third-place finisher, Dennis Stuckey. Huber and McDonald finished fourth and fifth  in that order.

For the Democrats, the plucky Henderson collected 6,272 votes, beating Saylor by almost 1,500 votes. Price came within 300 votes of Saylor, and challenging Henderson for the minority seat.

At this point, it appeared the fall 2003 election would go according to script. Shellenberger and Shaub would be elected and form a Republican majority, and either Henderson or Saylor would join them as Board’s Democrat member.

But the script was about to be re-written.

Watching the primary campaign for Lancaster County Commissioner in the spring of 2003 was a courtly, 55 year-old lawyer named James N. “Jim” Clymer. Jim Clymer was something of a renaissance man in fenced-in Lancaster County. A former farmer, truck driver, and carpenter, Clymer was also a licensed, instrument-rated pilot.

Clymer was then, and for several years, the national Chairman of the Constitution Party. In 1994, he ran for Pennsylvania Lieutenant Governor on the U.S. Taxpayers Party ticket (which became the Constitution Party in 1999). In that election, Clymer siphoned about 16 percent of the overall turnout. He also ran for another Pennsylvania state post as a Libertarian candidate for Auditor General in 1992, and again for Lieutenant General in 1998 with the U. S. Taxpayers. In the latter race, he garnered 10.5 percent of the vote.

Jim Clymer was born, raised, went to college, and married in Lancaster County. (He went to law school in Kansas.) A father of five, who served his church as a deacon, elder, and Sunday school teacher, Clymer was a quiet community pillar who knew the values of conservative Christian Lancaster County very, very well.

The senior and founding partner of a Constitution and religious freedom-based law practice, Clymer had a reputation for integrity and professional competence. With a direct, soft-spoken, gracious personal manner, Jim Clymer was also known as a good guy.

Clymer’s political ideology might be called social-conservative, or ultra-conservative, or paleo-conservative. Many Constitution Party members disaffectedly departed the Republican Party because it wasn’t conservative enough for them.

The Constitution Party’s positions include abolishing the Internal Revenue Service and the U.S. Department of Education, withdrawal from the United Nations, and a non-negotiable, one hundred percent opposition to abortion and gay marriage.

While these values might not resonate in San Francisco, or even nearby Philadelphia, they do in Lancaster County, where they are in the middle of the mainstream. Taxing regular Pennsylvanians to pay for a convention center struck Jim Clymer as just plain wrong. And he was going to speak up about it.

One week after the primary, on May 28, 2003, Jim Clymer indicated to the Lancaster New Era that he was leaning toward running a third-party campaign for commissioner, saying his conservative principles were more in line with Lancaster County voters than either Democrat candidate.

I decided to run for commissioner because none of the other candidates were willing to take a position against the convention center,” Clymer said to NewsLanc.com.

Weeks later, Clymer filed papers to run for Lancaster County Commissioner. To get his name on the November ballot, Clymer was required to collect a minimum 1,500 signatures from registered voters attesting to his fitness to serve as a county commissioner. By July 31, when Clymer turned in his signatures, he had almost 3,000 valid names, nearly double the necessary number. Jim Clymer was now going to have a voice in this election.

(One of the signatories on the Clymer petition was James Huber, the former county commissioner, who ran unendorsed, and lost, in the Republican primary. Huber was also a GOP committeeman for nearly three decades. After signing the petition, Huber was stripped of his committee position.)

What most people anticipated would be a traditional two-way contest between Democrats Bill Saylor and Molly Henderson, was now a battle that included Jim Clymer for the third Commissioner’s seat.

The issue that sharply distinguished Jim Clymer from the other candidates was his complete and unequivocal opposition to the convention center. Not only was the project dependent on taxpayer dollars for support, but it was a bad idea as a basic business proposition. The issue was the centerpiece of his campaign.

“In business, you don’t just go out and start a new project without looking at what’s happening in other places. Convention centers are failing all over the place. What does this city have that will make a difference? We don’t even have air service,” Clymer said during the campaign.

Although Clymer was buttoned-down and mild of manner, he acquired considerable campaign savvy with his multiple state bids. He was also closely aligned locally with a unique and valuable campaign weapon: Ron Harper, Jr.

In 2003, Harper and Clymer were friends who shared many of the same social and political views. Like Clymer, Harper and was a born and raised Lancastrian. Both were born-again Christians (Harper a Lancaster Bible College graduate) – both married, fathers of five.

And on the convention center issue, Clymer and Harper’s positions were identical – the project was ‘big government’ at its worst. The center should not be built on the backs of the taxpayers . . . and it should be stopped.

Although not an official member of the Clymer campaign staff, it is clear the colorful Harper was more than a typical backer of the candidate.

“Ron was a very active supporter of my campaign,” says Clymer today. “And his website [5thestate.com] was very helpful in raising some important issues at the time, particularly concerning the convention center.”

Harper has no doubt about Clymer’s impact on the race.

“Oh, there is no way the convention center issue would have come up except for Jim,” says Harper today. “The county bond backing was the biggie. Shaub voted not to back the convention center bond because of Jim!”

The “bond backing” referred to a $40 million Convention Center Authority issue that would be guaranteed by Lancaster County taxpayers. All of the commissioner candidates were on record opposing the county guarantee.

Meanwhile, away from the public eye in the summer months of 2003, the two Republican ’shoo-in’ commissioner candidates, Pete Shaub, and Dick Shellenberger, were quietly engaged in regular, private meetings with Lancaster County solicitor, John Espenshade.

Espenshade, the county solicitor for more than 15 years, was also solicitor for the Lancaster County Convention Center Authority (LCCCA), and at Stevens & Lee. Stevens & Lee still represented High Industries as High’s registered lobbyist in Harrisburg.

The topic of the meetings between Shaub, Shellenberger, and Espenshade — which occurred privately among the three after the primary election and before Shellenberger took office — was the potential sale of the county-owned Conestoga View Nursing Home

After the primary, Republicans Shaub and Shellenberger campaigned on a platform of reduced government and increased privatization. Divesting of a government-run facility like the nursing home was consistent with their stated political philosophy at a time when President George W. Bush was advocating the privatization of Social Security. But they didn’t mention that Conestoga View would be put up for sale until a deal was formally proposed in public at a Commissioner’s meeting in 2005.

These meetings, and the eventual sale of Conestoga View, would play a role in killing the political careers of Shaub and Shellenberger; in fact, they would contribute to the political deaths of the entire next board of commissioners.

In order to build something like a convention center, which in 2003 was estimated to cost $55 million, money must be borrowed. Few pay attention to the world of municipal bond finance, yet this is the mechanism used to finance many of the capital projects built in the United States.

A government entity, in this case the LCCCA, “floats” or “issues” or offers the bonds for sale. A bank usually buys the bond issue, and re-markets the bond to investors. (The interest on the bond may also be tax exempt.)

In order to maximize the amount and get lower interest rates for what is essentially a loan, bond payments are often guaranteed by some level of the government. The interest rates are lower because of the government’s usually good credit rating. (Lancaster County had a desirable “AAA” credit rating.)

If the Convention Center Authority couldn’t make its payments, the Lancaster County taxpayers would be responsible for the bond debt.

The possibility that the LCCCA might ask the county to guarantee a bond issue was initially raised in the spring of 2003 by a city businessman named Chris Kunzler, III.

Kunzler, the CEO of a large, Lancaster-based hot dog and deli-meat business, Kunzler & Co., was smart, didn’t have a ‘dog in the race,’ and he was not a hotelier.

In an April 20, 2003, Letter to the Editor of the Sunday News, Kunzler publicly raised the issue that a government guaranteed bond would be necessary to finance the convention center:

The convention center alone is expected to cost $55 million, with $15 million supposedly coming from the state. The hotel tax is generating approximately $3 million a year. This $3 million in tax revenue will not come close to servicing the debt on a $40-million bond issue. Let’s not forget the ongoing operating losses of the convention center and the money being spent to promote it. Who will guarantee this bond? And when the project fails, where will the funding come from then? Taxes? Who will be responsible for the losses—the community, with additional taxes?”

Jim Clymer’s explanation for entering the race—that no other candidate was addressing the convention center issue—was not entirely accurate. While he was the only person in the race who rejected all aspects of the convention center on its face, other candidates were on the record critical of increased government involvement in the project.

Democrat candidate Molly Henderson was the first in the race to address and oppose the idea of county backing of a construction bond. She said that although she favored the center, it should be “self-supporting” and not reliant on government backing.

In late September, Clymer even proposed a county-wide referendum on the issue.

By the fall of 2003, the design and cost for the center were not finalized; no true feasibility study had been performed; not a spade of dirt had been turned; and the legitimacy of Clymer’s one-issue candidacy showed that many people throughout the county were strongly opposed to the project.

During the fall campaign, five of the six candidates (the Green Party had qualified a candidate, Scott Kender) went ‘on the record’ opposing any county guarantee of a LCCCA-issued bond to construct the convention center. Only Democrat, Bill Saylor, was non-committal on the bond guaranty

Paul Thibault, the Republican, lame duck, Chairman of the Board of Commissioners, may have been alarmed by the prospects of the next board opposing a guarantee.

Thibault, with his Kennedy styled coif and silver-tongue, was the rarest of Lancaster County political insiders—an insider who was an outsider. Thibault, Connecticut-born and raised in Canada, was two times denied the Republican Party endorsement for commissioner, yet managed to be elected to consecutive terms.

A day-one supporter of the convention center project, Thibault was also the beneficiary of substantial campaign contributions from the Lancaster Alliance, the private, non-profit organization, three of whose founding 12 members made up Penn Square Partners. Every time Thibault ran, he collected the most money.

During the fall campaign, the bond issue had been discussed intensely in candidate debates and in the newspapers (both dailies supported the bond guaranty), but the Commissioners had not officially deliberated on the matter.

On October 16, 2003—without a formal request from the LCCCA—Thibault and the Commissioners’ board voted to hire bond counsel to explore a county guaranty.

“Something doesn’t smell well in Denmark,” said Jim Clymer at the crowded October 16th Commissioners’ meeting, raising the question of how the board could hire counsel unless it had—outside of public view—discussed the official action privately.

Only six days later, on the 22nd of October, the Commissioners held a public meeting to discuss the bond guaranty. One week later, in the form of County Ordinance 73, the Lancaster County Board of Commissioners, in a 2-1 vote (Shaub voted against) passed the bond guaranty.

It was less than a week before the election.

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Chapter Eleven: Ties that Bind: The old board shackles the new

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Chapter Nine: “All out war”

Posted on April 22nd, 2009

Chapter Nine: “All out war”

(Ninth in a series)

“It is all-out war at this point. Now it will cost them some money. We are going to exact payment out of them.”

– James O. Pickard, Chairman of the Lancaster County Convention Center Authority (LCCCA), referring to the 11 hotel operators who, for the second time, were filing a lawsuit against the LCCCA,

Sponsors of the convention center and hotel project were riding waves of victory at the close of 2001 and the beginning of 2002.

On September 12, 2001, decorum be damned, with bodies still smoldering beneath the rubble of the World Trade Center, the Lancaster County Convention Center Authority decided to hold its scheduled meeting to determine which firm would manage the public convention center.

Rejecting the recommendations of its own appointed task force, industry experts, the local tourism bureau, and the great majority of the county’s hotel and motel owners, the LCCCA voted to name Pittsburgh-based Interstate Hotels to manage the convention center. Interstate had already been hired by Penn Square Partners to manage their nominally private hotel.

In December, 2001, after a ten-day trial, Lancaster County Court of Common Pleas Judge Louis J. Farina repaired to his chambers to write the opinion for the court in the case in which 11 county hotel operators sued the LCCCA, the city and county of Lancaster. The 11 plaintiffs were all that remained from the original 37. Most cited the legal costs of dropping out of the suit.

In early January, 2002, after having gutted the hoteliers’ case with a number of devastating preliminary rulings the previous summer, Judge Farina decided against the hoteliers on all counts.

The bottom line rulings: the hoteliers did not prove that the “burden” of the room tax outweighed the “benefit” from spillover business the center would generate; the room tax was Constitutional; and the ‘Armstrong Amendment’ of 1999 was not “special legislation,” and would therefore stand.

It was a clear and decisive win for the sponsors, but far from the final battle of this increasingly nasty civic conflict. Within days, the same 11 hotel owners filed an appeal with the Commonwealth Court.

On January 24, in a 6-1 ‘en banc’ (full, seven-judge panel) written ruling, the Commonwealth Court remanded the case back to the Common Pleas Court in Lancaster and back to Farina. The appellate court decision was sharply critical of Farina’s judgment, writing, at one point, “This doesn’t make sense.” The Commonwealth Court essentially told Farina, ‘Get it right this time.’

The LCCCA responded by hiring renowned and politically well-connected Philadelphia lawyer, Richard A. Sprague, to petition to have the case heard not at the county level, but elevated to the State Supreme Court. Sprague, whose long career included defending the rich and high profile, including basketball superstar Allen Iverson on gun charges, was and is a ‘power lawyer’ of tremendous clout in the legal community throughout the state.

The Sunday News reported on its front page, February 24, 2002:

“Convention Center on the edge/Authority files with Pa. Supreme Court, citing fears project could be killed by hoteliers’ lawsuit”

The article reported a Penn Square Partners claim that Marriott had given a firm deadline in which construction must begin on the project. That date was said to be March 23, 2003. Similar to the supposed demand from Marriott regarding a common manager for both the hotel and convention center, the Partners did not produce a document confirming the Marriott ultimatum. The record does not show any reporters from Lancaster Newspapers – one of the two major Penn Square Partners – asking for, or reporting the contents of any Marriott document in either situation.

Despite the lack of corroborating documents from Marriott, Chairman Pickard took the threat from the Partners seriously. “If we don’t start the project by March 23, 2003, the project is dead,” he said.

Penn Square Partners’ spokesman, Nevin D. Cooley said at the time: “Were Marriott to withdraw from the project, then obviously, our interest in the project goes away, too.”

In his petition on behalf of the LCCCA, Sprague asked the Supreme Court to take immediate control of the now almost two-year old lawsuit.

The hotel operators were again represented by Mette, Evans, & Woodside, the Harrisburg firm that had represented them since the beginning of the litigation. The hoteliers were making the same original claims, plus arguing that the project had changed so substantially since first adjudicated by Farina that the entire “burden/benefit” question should be re-examined.

Sprague’s petition included the following: “It is the present intentions of the builders of the… hotel [Penn Square Partners] to withdraw from the project unless construction of the convention center commences by March 23, 2003.”

The hoteliers were attacked on other fronts. Mike Sturla, the Democrat state assemblyman representing Lancaster, went public and was quoted saying: “If this [hoteliers' lawsuit] is nothing more than a delay tactic to hold up the project long enough so it goes away, then they’re doing a disservice to everyone. They should let it be known that their objective was for it to die on the vine, not truth, justice and the American way.”

The words got uglier, more warlike. At the February, 2002, LCCCA public meeting, scant months after the 9/11 attacks, Lancaster Mayor Charlie Smithgall stepped to the microphone, turned to the hoteliers in the audience, and called them, “economic terrorists.”

At a Republican committee meeting a short time later, Mayor Charlie Smithgall’s wife, Debbie, stepped onto the battlefield, allegedly telling her apparently armed (and licensed gun dealer) husband, “I’ll take that gun out of your pocket and blow that son of a bitch away.” The “son of a bitch” in question was one Bernie Schriver  (not to be confused with New Era editor Bernie Schreiber), a fellow Republican, who had the gall to present the reticent Mrs. Smithgall a flier critical of her husband’s role in the project as she entered the meeting room. Police reports were made; charges were not filed.

The Lancaster City Council also took shots at the hoteliers as they pursued their case. The Council in a resolution, written by Councilman John Graupera, and sent to the Supreme Court as an amicus curae (‘friend of the court’) brief, wrote: “the actions of the hoteliers are not defensible.”
Richard Sprague was successful in persuading the state’s highest court to decide the case on an expedited timetable, a move that was met by project sponsors with jubilation.

The Lancaster New Era ran a front page banner headline and accompanying article on April 24, 2002:

“Big win for center, hotel/Pa. top court’s decision to hear controversial case delights backers of proposed convention center, hotel for downtown Lancaster. A favorable ruling soon might allow construction to begin in early 2003.

“In what supporters are hailing as a major victory, the state Supreme Court decided Tuesday to take fast-track action on the fate of Lancaster’s downtown convention center and hotel. . .”

In the first week of May, 2002, attorneys for the Authority – Sprague and Scott Spencer of the Stevens & Lee firm — and those representing the hotel owners – Christopher Conner and Kathy Simpson from Mette, Evans — submitted written briefs before the State Supreme Court. The LCCCA submitted 50 pages of argument and 92 pages of supporting documents.

“The hoteliers should not, in effect, be permitted to destroy this important economic stimulus project by delaying it, when they cannot succeed on the merits of their challenges,” the Authority’s brief states.

The hoteliers filed a 42-page brief, largely relying on the Commonwealth Court’s en banc ruling of January, 2002.

When the Supreme Court still had not decided the case by the end of June, the sponsors of the project again sounded an apocalyptic knell regarding the project’s future.

A Sunday News front page headline on June 30, 2002,read:

Court’s silence may force decision on center/Authority chairman says convention project at ‘crisis point’; to call meeting on fate if Pa. Supreme Court doesn’t act by Friday”

This article was striking because of the extremist language the sponsor Lancaster Newspapers editors used in socially conservative Lancaster County. According to the article, the Court’s delay “could mean aborting plans to build a convention center and luxury hotel in downtown Lancaster.” And High spokesman, Tom Smithgall, said in the same item: “They’ll [hoteliers] try to do anything they can to kill this project.” [emphasis added.]

Pickard backed off his “crisis” mentality at the July LCCCA meeting, vowing continuing support of convention center and saying there was “no plan to abandon the project.”

The Convention Center Authority and its supporters got the news they were waiting for on July 16, 2002. The State Supreme Court, in a 13-page ruling written by Chief Justice Stephen Zappela, affirmed Farina’s decision and rebuking the Commonwealth Court’s remanding the case back to the lower court.

The lawsuit was not completely settled, however. The Supreme Court said there were remaining issues that should be decided by the appellate Commonwealth Court for an “expeditious review.” Those issues included whether the so-called ‘Armstrong Amendment’ was “special legislation” specifically intended to help only the Lancaster convention center project. The plaintiffs’ claim that the project had substantially changed in size, scope, and cost was also to be heard at the appellate court.

In the second week of September, 2002, both sets of lawyers went before the Commonwealth Court in Harrisburg. Three weeks after oral arguments were heard, on October 4, the Court returned its decision: Another complete victory for the Authority and sponsors of the project. The decision was unanimous.

“Hey, we are the clear winners and they are clear losers,” gloated Pickard to Lancaster Newspapers.

The hoteliers were not prepared to accept this defeat. Taking the advice of one of the jurists on the Commonwealth Court, the same group of 11 plaintiffs filed another suit. “The project had unquestionably changed,” said the Continental Inn’s Ron Gleiberman recently. . “It was much bigger and much more expensive. And when one of the judges on the appeals court suggested, during open oral arguments, that we file a second lawsuit arguing that fact – that it was a completely different project than the one Farina looked at — that is exactly what we did.”
The reaction from the sponsors on the new litigation was swift, brutal, and united. In a rare joint press conference, on December 6, 2002, the top Lancaster county and city officials, along with Chairman Pickard, expressed their collective outrage at the hoteliers, and their intention to counter sue them under the Dragonetti Act, which addresses the issue of filing frivolous lawsuits.

At the press conference, County Commissioner Ron Ford said the hoteliers “are holding the people of Lancaster County hostage to their own self-interest.”

Mayor Smithgall was there to say he wanted the hoteliers accountable for the “serious economic harm” he said they were bringing to the city. And County Commissioner Chairman, Paul Thibault, said: “This extremism has got to come to an end,” adding the owners of the Eden Resort, Drew Anthon and Peter Chiccarine had a “war to the death mentality. They won’t stop until they’ve killed this project that will be a benefit to them and everyone else in the county.”

The hotel operators, who continued to be taxed for every room they rented, didn’t see things in quite the same way. In the coming year, the opponents of the project would be getting some unexpected and very powerful support. The nasty war was about to get a lot nastier.

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Chapter Ten: The ‘bumpy ride’ of Commissioners Shellenberger, Shaub, and Henderson

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LETTER: Were the Lancaster Newspapers’ intentions good?

Posted on April 7th, 2009

LETTER: Were the Lancaster Newspapers’ intentions good?

I suspect that Lancaster Newspapers’ involvement in the hotel and convention center project might have started out with good intentions.  After all, LNP has made significant investments in downtown Lancaster in the past.  But once they were legally bound to High, they found themselves being dragged along with S. Dale High’s personal ambitions.

When opposition to the project started to build, I believe LNP reflexively went on the defensive.  And the best defense is a good offense.

Question: is it possible that LNP saw the hotel as a way to generate revenue in the face of the inevitable decline of the newspaper business?

Editor’s response:   The investigation continues and it is premature to reach any conclusion, especially as to early intentions by each of the sponsors.  However, we perceive Jack Buckwalter, CEO of LNP as a dupe in the early stages.  He told us years ago that he had been concentrated onSteinman non-newspaper business investments out of state and “this was Dale’s project”

The question is whether the matter evolved into a conspiracy with LNP part of it.  Whichever the case may be, abuse of the newspapers’ power and prestige to deceive the public and to undermine conscientious county commissioners is inexcusable.

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PWC withdraws market studies, 2006

Posted on April 5th, 2009

PWC withdraws market studies, 2006

(This NewsLanc article appeared in 2006)

In a stunning development that could have substantial consequences for the proposed Mariott Hotel/Convention Center development, an email has surfaced from a senior PriceWaterhouseCoopers (PwC) analyst, which says that because of the drastic changes in the nature and scope of the project, the powerhouse accounting firm asked that the board’s Executive Director, David Hixson, remove all reference to PwC from its website.

“I am very concerned that the project before us does not match the project PriceWaterhouse analyzed,” said Laura Douglas, an LCCCA board member. “This forces the issue that what is critically needed is thorough feasibility study of the project as it now stands.”

“This is grave matter,” said another LCCCA board member who requested anonymity. “This could affect the bond issue.”

Board member, Deb Hall, said if Mr. Hixson did receive the note from Mr. Canton at Pricewaterhouse, and Hixson continued to use earlier Pricewaterhouse reports in its promotions, then it confirms her concerns about the “board’s inability to conform to standard business practices.”

She added, “At this point, I’m hesitant to spend more money, but if the project goes forward we need a feasibility study to see if it makes sense.”

The email, which first appeared on 5thEstate.com, shows Robert Canton, Director PricewaterhouseCoopers Sports, Convention & Tourism Services, voicing serious professional concerns about the feasibility of proposed project.

Canton writes: “In March of this year, I was so concerned that [PriceWaterhouse Cooper's] analyses (demand study, economic impact, etc.) of a different building program were being used to ‘promote’ the proposed convention center development, that I wrote a note to Mr. Hixson requesting that all reference to PwC be removed from the LCCCA website.”

The memo also includes: “Regardless of any review of our prior studies, the physical characteristics of the development that I understand to be proposed are VERY different from the project I studied (the equivalent of using a study of a 500 room Marriott to evaluate a 300-room Hampton).”

Canton concludes the memo by stating: “…I try to be very clear that we will not be influenced by what the client or community stakeholders ‘want,’ but rather will base our findings on what the market supports.”

The LCCCA is under pressure from several board members, community leaders, and concerned citizens to conduct a thorough feasibility study on the proposed $137 million project. Thus far, board chairman Ted Darcus has dismissed these requests.

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PWC Market Study: No vote of confidence

Posted on April 4th, 2009

PWC Market Study: No vote of confidence

By Luis A. Mendoza and Robert Edwin Field

(Editor’s note: The NewsLanc article was first published about three years ago.)

Despite repeated requests by the undersigned then city councilman and other officials and concerned citizens to view the PricewaterhouseCoopers 2000 and 2002 purported “feasibility studies,” access was denied. It was alarming to learn recently that the so called “feasibility studies” were merely market studies. But, upon finally having an opportunity to review the market studies, it is shocking to discover that they are more negative than positive in their implications. Here are quotes from the studies:

· “Air access (‘an airport served by major airlines’) is important for national and regional events where the majority of attendees fly to the destination…. Lancaster’s closet major airport is located approximately 30 miles north of the city in Harrisburg.”

· “Highway access to the center is relevant for statewide and local events since attendees tend to drive to the destination and the venue.”

· “A wide range of attractions and amenities help a destination draw a greater number of attendees and increase the possibility of attendees bringing accompanying persons.”

· “…trade shows are generally located in destinations offering large regional resident populations, large metropolitan area hotel room inventories, a facility with more contiguous exhibit space than can be accommodated in a center city location, and an airport served by major airlines.”

· “…for professional association facilities, surveys of meeting planners and association executives typically state lack of a concentration of proximate high quality hotel rooms, unique shopping outlets, or a wide variety of nearby restaurants as main reasons for not selecting a center of destination.”


· “Multilevel exhibition halls are successfully marketed in only a few of the most popular destinations in the world, such as Boston and Hong Kong.”

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Chapter Eight: Uncommon Management

Posted on April 4th, 2009

Chapter Eight: Uncommon Management

(Eighth in a series)

“I don’t like the way this process has played out. I have felt like I had a gun to my head.”

– Garth Sprecher, Lancaster County Convention Center Authority (LCCCA) board member, after voting to appoint Interstate Hotels the common manager of the convention center and hotel, September 12, 2001

If the controversy over the historical buildings and the hoteliers’ lawsuit were among the first early skirmishes in the convention center civil war in Lancaster, then the fight over who would manage the taxpayer-financed convention center was its first major battle.

The sparks that ignited this early conflagration were lit in the summer of 2000. In July of that year, after months of looking at the tourism and convention center market, a nine-member, LCCCA-appointed “Tourism Task Force” went before the LCCCA board and recommended the board expand the size of the convention center from 61,000 square feet to at least 100,000 square feet.

“We strongly recommend the authority employ further research to study why the convention center should be initially designed and built to be no less than 100,000 net square feet of exhibit space,” said Bradley Clark, chairman of the task force and member of the LCCCA board of directors at the July meeting.

In addition to Clark, a commercial realtor, the task force members included three representatives from the hotel industry; two restaurant executives, a theater director, a Lancaster Alliance director, and two members of the county visitors’ bureau board of directors.

The next month, at the August, 2000, LCCCA meeting, the board commissioned PricewaterhouseCoopers (Pricewaterhouse), an international hospitality consulting firm, to examine the viability of a larger convention center facility, and essentially re-size and update the Ernst & Young market analysis of 1999. The cost of the new study: $77,000.

As it did with the Ernst & Young report, Lancaster Newspapers reported that Pricewaterhouse was conducting a “feasibility study.” Again, this was misleading. Pricewaterhouse never claimed it to be more than a market study, nor did it perform a genuine feasibility study.

Both the Ernst & Young and Pricewaterhouse reports recommended a single or “common” manager for the hotel and convention center. The Ernst & Young report was commissioned by the Lancaster Alliance, three of whose founding members comprised Penn Square Partners, the ostensibly “private” owners to be of the hotel.

At the LCCCA board meeting on November 8, 2000, representatives from Pricewaterhouse delivered their findings to the board and the public. The meeting did not go without incident.

The Pricewaterhouse consultants estimated construction costs for the larger facility could reach $35 million, which could support a facility as large as 114,000 square feet – nearly double the original projected size.

The increase in cost, from the previous high estimate of $30 million, would fall directly on the taxpayers, particularly the county hotel owners.

During the public comment portion of the meeting, after Pricewaterhouse presented its report, Peter Chiccarine, the executive with the Eden Resort, and a litigant against the Authority, exchanged angry words with Pickard and the Authority’s solicitor, John Espenshade, who was also the county solicitor and partner at the Stevens & Lee law firm.

WHAT WAS SAID?

Espenshade threatened to call the police to escort Chiccarine out of the building.

“I was set up,” said a disgusted Chiccarine to reporters as he left the meeting.

In January, 2001, the LCCCA board mailed approximately 20 requests for proposals to potential managers of the convention center. By March, the board had winnowed the number to five firms, and by May, 2001, three companies made the ’short list’ as finalists: Spectacor Management Group, Global Spectrum; and Interstate Hotels.

All three firms were based in Pennsylvania, and experienced managing large and small conference and convention centers nationally. Spectacor, headquartered in Philadelphia, had the most experience with convention centers, managing more than 90% of the public convention space in the country, including several of the largest facilities in Pennsylvania. Global Spectrum, also based in Philadelphia, managed the Philadelphia Convention Center, among other large centers. Interstate, a Pittsburgh-based company, had a long partnership with Marriott Hotels, and also managed many large conference centers and several convention centers across the country.

In May, and again in August, 2001, the Greater Lancaster Hotel and Motel Association (GLHMA) sent a letter to Pickard and the LCCCA board urging a separate manager for the convention center, distinct from the still-unnamed hotel operator.

“The bottom line is that we opposed a common manager, period,” says Rodney Gleiberman, General Manager of the Continental Inn and GLHMA member, today. “We were not opposing this common manager, or that common manager. We opposed all common managers based upon the inherent conflict-of-interest, and what we knew would be another item to tip the scales in favor of the hotel competing against us on an uneven playing field.”

On July 24, 2001, Penn Square Partners announced that Marriott had been selected as the hotel ‘flag’ under which its hotel would be built, and that Interstate would manage the hotel.

The next day, July 25, Nevin Cooley, High Industries executive and Penn Square Partners President, urged the LCCCA board to select Interstate as joint manager of both the “private” hotel and “public” convention center.

This is when the battle exploded. The fight was staged on the front pages of Lancaster Newspapers, which found itself with a hot news story in the usually slow ‘dog days’ of August.

Cooley, the doughy, longtime spokesman and ‘right-hand man’ for Dale High, argued that through shared physical space, personnel, promotion, bookings, and other overlapping functions, that the LCCCA could save more than $600,000. This represented more than 40 percent of the estimated LCCCA annual budget.

In Cooley’s appeal to the Authority board, he said – but he did not provide a letter or statement corroborating his claim – that Marriott gave Penn Square Partners three months to complete contracts between itself, Interstate, and the Authority. Cooley added that common management was a condition Marriott was placing on its involvement with the project.

A Marriott executive, Roger Conner, in a late August interview with Lancaster Newspapers, contradicted this suggestion, saying, “Marriott does not dictate who must manage convention centers attached to Marriott hotels. We do not have a requirement that we must manage or our franchisee must manage every convention center that’s attached to our hotels. It would be pretty difficult to presume that any policy of such would exist.”

Cooley seemed to have a sympathetic ear in LCCA Chairman Pickard, who said at the meeting, “The two projects are more or less joined at the hip.”

For the next several weeks, through the month of August, the debate between common and separate managers for the convention center was regular feature on the front pages of Lancaster Newspapers. On August 9, the Intelligencer Journal ran a banner front-page headline and article:

“SPECTACOR MAKES PITCH TO MANAGE CONVENTION CENTER, WARNS OF POSSIBLE CONFLICT IF HOTEL’S FIRM IS IN CHARGE”

The next week, on August 15, the Tourism Task Force came back with its recommendation. By a vote of 7-2, the Task Force recommended Spectacor manage the convention center. The two Task Force members to dissent and vote for Interstate were Jack Howell, director of the Lancaster Alliance, and Deirdre Simmons, a director of the Fulton Theatre, who admitted she did not read nor reviewed any of the proposals.

On the same day the Task Force recommended Spectacor, the Lancaster New Era ran a front-page item:

– “WILL PANEL TAKE ADVICE ON FIRM TO RUN CENTER?” — suggesting that the LCCCA might ignore the recommendation of the panel it appointed.

On August 16, 2001, a group of hoteliers wrote a letter to Chairman Pickard, among other suggestions, stated:

“We experienced SMG’s proposal first hand and found their presentation compelling.  We left the meeting optimistic that SMG’s expertise in operating similar Convention Centers coupled with Interstate’s proven track record in successful hotel management will provide the Penn Square Project the best management team possible.”

On August 17, the Intelligencer Journal published an article, “WILLOW VALLEY WEIGHS IN ON MANAGER BID,” describing how the management of the Willow Valley Resort, which had been in lockstep with the Partners and the Authority until this point, recommended Spectacor and separate management.

Penn Square Partners went on the offensive, and used the front page of the Sunday News to threaten to abandon the entire project unless Interstate was selected to manage both facilities. On August 19, with a melodramatic, extra bold banner headline, the Sunday News reported:

“DOWNTOWN HOTEL TEETERS ON BRINK // PARTNERS IN WATT & SHAND BUILDING WILL PULL OUT IF CONVENTION CENTER AUTHORITY TAKES ADVICE OF TOURISM TASK FORCE FOR SEPARATE MANAGEMENT AND FACILITIES”

In a letter to the Authority board, signed by all three Penn Square Partners – High, Lancaster Newspapers, and Fulton – the Partners wrote:

“Despite the naysayers, Penn Square Partners persisted by investing substantial time, effort and money to promote this vision for a better Lancaster. The opponents chose to litigate and undermine the collaborative efforts proposed by Penn Square Partners and the authority. Their sole goal was to delay, postpone and destroy the project and the corresponding benefits to the community.”

The letter, much of which was printed in the Sunday News article, continues:

“If the authority board accepts the recommendation from the task force, Marriott will require the hotel to compete directly with the convention center for meeting and ballroom business.

“…It is the authority’s fiduciary responsibility to create a structure that optimizes the long-term economic viability of the convention center. To recommend otherwise is shortsighted, narrowly focused and only beneficial to the self-interest of a few hoteliers in the community. … Penn Square Partners will not be party to a structure that endangers the economic feasibility of the hotel and convention center project. It would be a greater disservice to the project and the community to proceed under the task force’s recommendation.”

At a LCCCA meeting on August 22, three top hospitality industry experts, each with decades of experience, spoke on behalf of separate management for the public convention center.

One of the experts, Robert Butera, president and CEO of Philadelphia’s Pennsylvania Convention Center, questioned whether, in fact, common management was a condition Marriott placed on Penn Square Partners.

“If that’s what it is, let’s call it that,” Butera said. “But it’s not. It’s a direct subsidy [to Penn Square Partners].”

Much of the Lancaster political and business establishment publicly supported Interstate. These supporters included County Commissioner Paul Thibault, Richard Kneedler, President of Franklin & Marshall College: the School District of Lancaster, and, perhaps the project’s most fervent supporter, Lancaster Mayor Charlie Smithgall, who was quoted at the time, “I don’t care if [Spectacor] is the most spectacular convention center manager in the world. I think it’s better to have Interstate manage it than to have nothing.”

The lobbying leading up to the scheduled, Wednesday, September 12, 2001, vote was so heated that, before dawn, on the day before, September 11, it drew the attention of Knight-Ridder, which picked up the story and ran, “Lobbying Intense as Lancaster, Pa., Convention Center Vote Nears.”

The Knight-Ridder article began: “As the vote nears on an operator for the planned Lancaster County Convention Center, the people who will be making that decision are reading letters and e-mails and answering their telephones. ‘I have never in my life received as much information about how I should vote on anything as I have in the last couple of weeks,’ said Paul E. Wright, one of seven appointed Convention Center Authority board members expected to cast their vote Wednesday morning….”

Considering the world-changing events of September 11, 2001, it is startling that the Lancaster County Convention Center Authority would hold its scheduled meeting for September 12.  Banks, schools, libraries – the entire country was closed; its people in collective shock the day after the terrorists’ attacks. But the Lancaster Convention Center Authority was open for business the very next morning.

Pickard had decided the LCCCA could not delay, by even a single day, the vote to determine which company would manage a convention center in downtown Lancaster, Pennsylvania.

The chambers at the Southern Market Center were unusually crowded, especially for a morning meeting. Approximately two-thirds of the audience members were in favor of Interstate managing the convention center.

Robert Butera, the industry executive who represented the Philadelphia Convention Center, bluntly told the board that Spectacor was clearly the better choice for the position of manager. The Task Force members spoke on behalf of Spectacor.

Then Dale High himself approached the microphone. High, medium height, in his mid 50s, wearing a business suit, with sloped shoulders, receding hairline, with a neatly trimmed beard, spoke: “This is not a matter of us taking our ball and going home,” he said, speaking on behalf of Penn Square Partners.

Then he compared the convention center project to the World Trade Center attack of the previous day , “As we saw with the Twin Towers; these things can be taken away in a day.”

After High spoke, the audience erupted into applause.

The LCCCA board later voted 5-1 to give the contract to Interstate Hotels. (Bradley Clark was not present). The dissenting vote belonged to Camilla Collova, who remarked, “The fact that [Spectacor] knows how to do it elsewhere tells me they can do it here.” Collova left the board the following month, as did Clark.

Mark Moosic, the Interstate executive eventually chosen to manage both facilities, said of the board’s choice of a single manager: “To me, this was a very clear decision. There are a number of synergies that can be used with one manager: minimized expenses by combining staff, sales, and operations between the two. You don’t need two separate leadership teams – two payrolls. There is also greater flexibility and efficiency with one manager.” Moosic also noted that Interstate manages facilities larger and with more complexity than the downtown Lancaster center.

Gleiberman, of the Continental Inn, who spoke at the September 12, 2001 meeting, said, “I did not, and do not, support common management for this project and do not believe that a single qualified candidate to work both sides of this project was even considered. Our public convention center needs an unconflicted captain at the helm to run the center in the most efficient way to protect its owner – the Lancaster County taxpayer. Time and time again, the presence of a public entity in the project has titled the scales away from the taxpayer rather than the other way around.”

Robert E. Field, a businessman with decades of experience in hotel and apartment development and ownership, and a later critic of the convention center project, in retrospect supports the LCCCA board’s decision: “I agree that the convention center and the hotel should be under common management for purposes of economy and to maximize sales effectiveness,” said Field, who is also publisher of NewsLanc.com. “I hold Interstate Hotels in high esteem. However, it would be essential that Interstate Hotels understands that, in representing the Convention Center, they are working on behalf of all hoteliers and the community, not just the Marriott.”

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Chapter Nine: “All Out War”

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Chapter Seven: Razing History

Posted on March 23rd, 2009

Chapter Seven: Razing History

(Seventh in a series)

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 Convention Center 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, was the moving force behind of the 13th, 14th, and 15th 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 Americans to call Lancaster home, even more consequential than James Buchanan, the country’s 15th 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.  Ms. Smith, apart from being a pioneering black businesswoman, was also said to have been a ‘conductor’ on Harriet Tubman’s ‘Underground Railroad’ network, helping fugitive slaves escape the slave holding South.

The issue confronting the Lancaster Convention Center Authority was that the location of the proposed modern convention center was on top of the home and business of one of the most important Americans who ever lived.

Randolph Harris was the Executive Director of the Lancaster Historic Preservation Trust during these years. Harris, a Yale-educated historian, appreciated Stevens’ historical significance. Harris also knew 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 chairman 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 Historic Preservation 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.

Pickard announced the next month, 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 Convention Center 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 planned to raze the buildings entirely, until Harris objected, citing the easements.

The Convention Center Authority and Historic Preservation 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 – the whole of the three historical buildings across the street to a vacant parking lot behind the Swan Hotel.

“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, “(the LCCCA) 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.”

On a frigid but sunny day, Ron Harper, Jr., the citizen gadfly-journalist, was on hand with his video camera for the February, 1998, press conference on Penn Square to record Penn Square Partners’ announcement of its purchase of the Watt & Shand building. Nevin Cooley, president of the Partners, spoke to the media and local dignitaries, including Sen. Gib Armstrong and Mayor Charlie Smithgall.

Penn Square Partners was formed for one and only one reason: to save this [the Watt & Shand] building behind me,” Cooley said.

By 2002, it was clear that the Partners were less concerned with “saving” the historical landmark building, than with gutting it entirely, albeit preserving  certain exterior walls.

In order to qualify for Federal tax credits for the hotel portion of the project, Penn Square Partners needed the approval of the Pennsylvania State Historical and Museum Commission, Bureau for Historic Preservation. They were required to submit the demolition and architectural plans for the development to the Historical Commission.

In a scathing letter dated April 23, 2003 to Thomas D. Smithgall, an executive with High Real Estate (and no relation to Mayor Smithgall), the Historical Commission sharply criticized the proposed project:

Given the extent of development and demolition, it is our opinion that 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. In addition, due to the extent of demolition and development, it is our opinion that the National Park Service would not approve the project for federal tax credits.”

The letter from the Historical and Museum Commission detailed its objections:

A 12-story tower (220 rooms) will be added on top of the Watt & Shand building. Its location on top of a historic building is grossly out of character out of scale and character with the historic building.

The project will also result in substantial change in character to the Watt & Shand building because of the extensive changes needed to make the building a convention center hotel. 1) From what we can tell, there will be no sense that one is entering a former department store as a result of creating a 4-story [full height] atrium, a seamless connection to the convention center, the removal of all historic fabric [plaster beams and columns, pressed metal ceilings, relocation of elevators to relate to the new tower, loss of historic stairs, replacement of all original sash. 2) The removal of the original display windows and recess a new exterior wall on the principal elevation in order to create an arcade inconsistent with the building’s historic character.”

As had been done decades earlier with Lancaster Square – tearing down an entire block in the heart of downtown Lancaster – the sponsors of the convention center and hotel project went about doing much the same at Penn Square, apart from retaining the Watt and Shand building’s facade.

Another landmark building designed by C. Emlen Urban was on a to-be-demolished list, as was the former home of Lancaster’s greatest citizen, Thaddeus Stevens.

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Chapter Eight: Uncommon Management

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Chapter Six: The Authority

Posted on March 21st, 2009

Chapter Six: The Authority

(Sixth 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, to an audience member at a LCCCA public board meeting, May, 2000

In addition to imposing a hotel room rental tax, the Lancaster County Commissioners established the Lancaster County Convention Center Authority (LCCCA) in their September 15, 1999, resolutions.

The LCCCA’s mandate was to administer the construction of what was then projected to be a 61,000 square foot convention center at a cost of $35 million. The proposed convention center would be adjacent, according to Lancaster Newspapers’ reports, to a $45 million “privately-owned” “four-star” “luxury” hotel, located at the site of the historic Watt & Shand building. The hotel would be owned and operated by Penn Square Partners.

Under Ordinance 45, the majority of collected tax revenue, paid monthly by the hotel and motel owners to the County Treasurer, would be remitted to the LCCCA board to spend on the project.

The Ordinance states that the LCCCA was to be comprised of a seven-member board of directors appointed by the city’s Mayor and County Commissioners. The city and county would alternate the “swing” vote on the LCCCA board every four years. The original LCCCA board had four county appointees, with three city appointments.

The four initial county appointees approved by the Lancaster County Commissioners for the LCCCA board were: James O. Pickard, the former state commerce secretary and Mayor Smithgall’s special economic advisor; W. Garth Sprecher, a senior executive of Ephrata-based D&E Communications; Camilla L. Collova, recently retired Armstrong World Industries vice president; and Paul E. Wright, retired general manager of a local Sears store.

The three city authority members named by Mayor Smithgall and approved by the Lancaster City Council were: Christina L. Hausner, an attorney; Willie Borden, Jr., an electrician and local Elks Lodge president; and E. Bradley Clark, a member of the Lancaster Campaign and vice president of Earl Realty, the parent company of Dutch Wonderland, a Lancaster County amusement park.

At its first meeting in October, 1999, after selecting officers – Pickard was named Chairman and Executive Director – the newly formed board had one item of business. The board voted on a solicitor for the Authority. The seven members unanimously approved Stevens & Lee, the firm that wrote the enabling state legislation. This was a cozy relationship from the start, as the first LCCCA offices happened to be located in the Fulton building, in the office space leased and occupied by the Lancaster branch of the law firm of Stevens & Lee.

In early 2000, the Pickard-led board began the process of purchasing the properties around the proposed location for the convention center.

The Authority was counting on $35 million in taxpayers’ money to spend; $15 million from the state grant, and $20 million from a bank loan. Room tax revenues would be used for paying the debt service on the loan, and for LCCCA planning and development expenses.

In March, 2000, the LCCCA purchased four dilapidated properties bordering South Queen Street, Vine, and Christian Streets. The land and buildings were purchased for a reported $539,900.

A more difficult acquisition for the Authority was buying 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 center, 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 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. Still, Atwater agreed on the $725,000 price. Pickard submitted the offer to the LCCCA board. The board rejected it, and instead offered $675,000 to Atwater. 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 saw few options. “There was the threat of eminent domain,” said Atwater a few years later to a reporter from NewsLanc.com. “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.”

The LCCCA had another problem in 2000, and it was an expensive one; the Authority was being sued.

On March 24, 2000, 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 LCCCA, and the city and county of Lancaster.

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 project supporter Sen. Gibson Armstrong, modified the 1994 Convention Center Act, and virtually neutered the hoteliers’ original basis for their case.

The basic argument in the suit filed by the hoteliers was that the project presented an unfair “burden,” i.e, the room 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’ lawsuit 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 a pivotal, backgound role in getting the project completed.

The hoteliers’ 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.

After the hoteliers’ suit was filed, Lancaster Newspapers, Inc. promptly unleashed prominent stories sharply criticizing the hoteliers.

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

“CENTER BACKERS SLAM LAWSUIT,” herald 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 beautiful 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, 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 and the Authority were Mayor Charlie Smithgall, City Council President Nelson Polite, and Tom Baldridge, president of the Lancaster Chamber of Commerce and head of the Lancaster Campaign.

Even Dale High 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.”  (His firms were to receive millions in management fees from the LCCCA, tens of millions in construction contracts, extraordinary benefits from long term concession contracts, and end up as equitable owners with the Lancaster Newspapers, Inc. of the Marriott Hotel, in large part at public expense, and deriving exceptional benefits from contracts with the LCCCA.)

Opponents of the project or “regular” Lancaster County citizens were not quoted in the articles.  IS THIS CORRECT?

The Lancaster Newspapers’ response to hotelier resistance to the project 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.  SOME EXAMPLES  PLEASE.

Jim Pickard ran LCCCA meetings with an imperious gavel.

As chairman, Pickard displayed a penchant for ejecting  the audience from an ongoing LCCCA meeting, 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 civility. 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 spoke that the speaker was a litigant against the Authority.

Sometimes the histrionics devolved into farce. At one meeting in early May, 2001, local gadfly Ron Harper, Jr., presented Pickard with a chocolate cream pie—“humble pie,” Harper called it. With mock deference, Harper, a colorful figure and freelance journalist, 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 incident 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 hotelier litigation provided Pickard the justification to prohibit the board from answering questions from the public during LCCCA meetings. But the policy proved to be public relations problem, one that eventually forced Pickard to address.

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 Authority 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.

During 2000 and part of 2001, the LCCCA’s “public” meetings were held at the Duke Street County Courthouse, 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 scant members of the public.

Ron Harper, Jr. was one of the few citizens regularly present at those early meetings, as were a small number of hotel and motel owners, such as Rodney Gleiberman of the Continental Inn and Peter Chiccarine, of the Best Western Eden Resort. Both Gleiberman and Chiccarine’s hotels were plaintiffs against the LCCCA.

In a letter to the Lancaster New Era, Mark Clossey, former General Manager of the Lancaster Host Resort and Hotel, also 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 one LCCCA meeting during 2000, LCCCA, after Clossey asked a question during the public comment portion, Pickard glared at Clossey.

“I’m not obliged to answer any of your questions,” Pickard said, adding:“The question you just asked falls in the classification of not being responded to.”

###

Chapter Seven: Razing History

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Credo

"....I have never made it a consideration whether the subject was popular or unpopular, but whether it was right or wrong; for that which is right will become popular, and that which is wrong, though by mistake it may obtain the cry or fashion of the day, will soon lose the power of delusion, and sink into disesteem." Thomas Paine, Common Sense, on "Financing the War", March 5, 1782

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