The Fog of War, Part I

(Forty-fourth in a series)

by Christiaan Hart-Nibbrig

We – I – made a mistake. We should have been looking at the contracts. We took the bait.”

Robert E. Field, reflecting on the decision to pressure the Lancaster County Convention Center Authority to release legal invoices, instead of examining the multi-million dollar contracts the Authority had entered into with Penn Square Partners.

Opposition to the convention center project was bolstered by the selection of Pannell, Kerr, Forster (PKF) to perform the first feasibility study on the project. After PKF was chosen in mid-February 2006, many critics of the project turned their attention to the charges of the law firm at the center of virtually every aspect of this project: Stevens & Lee.

The Reading-based firm authored (and lobbied for) the 1994 Third Class Convention Center Authority Act, allowing counties to impose a five percent room rental tax on all county hotels and motels in order to build convention centers. This tax generated about three million dollars per year for the Lancaster County Convention Center Authority (LCCCA).

Stevens & Lee is also the registered lobbyist for High Industries, the parent company of High Associates, the general partner of Penn Square Partners.

At the time the LCCCA was established in September, 1999, John Espenshade, a Stevens & Lee partner, was simultaneously the Lancaster County solicitor and the solicitor for the LCCCA. Stevens & Lee occupied the same dual role in Berks, Luzerne, and Erie counties when those counties built controversial publicly financed convention center projects.

Additionally, Stevens & Lee attorneys represented about one-third of the county’s outside “special counsel” work, and received the attorneys’ fees for the sale of Conestoga View. Espenshade himself was involved with the preliminary negotiations between Commissioners Shellenberger and Shaub regarding the nursing home transaction. (The Conestoga View issue proves to be so politically devastating that Commissioner Shaub will quit before his term ends; Shellenberger decides not to run again; and Henderson is trounced in her re-election bid and sues Lancaster Newspapers for libel related to the Conestoga View coverage.)

The Lancaster offices of Stevens & Lee are even located in Fulton Bank, then a limited partner in the convention center project.

It was especially the firm’s role as LCCCA solicitor that drew the attention of project critics.

By 2006, Stevens & Lee had billed (and been paid by) the LCCCA more than six million dollars. Every single one of the more than 200 invoices was devoid of itemized detail with respect to the work performed. Each invoice simply read:

For professional services rendered on behalf of the Lancaster County Convention Center Authority.”

In December of 2005, Robert Field launched Newslanc.com. This writer worked as its first news editor. On the site, which was updated daily, Field wrote a “Watch Dog” column, in which he would  discuss and often praise or criticize local items published in the Lancaster newspapers, with particular attention given to the convention center issue.

NewsLanc newsletters were handed out at the popular Lancaster Central Market, baseball games, and other county events that attracted large crowds. (Field often joined in handing out the fliers, something he still does today.)

Field, an experienced political activist, also ran lively, often pointed, radio spots for NewsLanc at popular Lancaster stations.

Through the Pennsylvania Right to Know law, NewsLanc obtained the invoices for the Stevens & Lee LCCCA billings. There were 228 invoices ranging in amounts from less than one hundred dollars to more than $100,000.

Field analyzed the numbers and concluded that Stevens & lee would have had to have multiple  personnel working full-time on the project to come up with the amount being charged, which he believe was inconceivable.

To Field, in the early months of 2006, the seemingly cavalier withholding of normal billing procedures was a red flag, and he was determined to get the itemized invoices released. “I took the bait,” he says today.

Joining Field in aggressively questioning the Stevens & Lee invoices were the three new county-appointed members of the LCCCA board of directors.

Laura Douglas, Deb Hall, and Jack Craver – three strong, independent personalities — had already revealed their disenchantment with the project by the time they began asking about the attorneys’ fees. In early January, 2006, only months after being appointed to the board, the three convened a large public meeting to air out questions about the project. More than 200 people attended the meeting.

Now, Douglas, Hall, and Craver were asking about the invoices at board meetings.

The issue with the Stevens & Lee bills for me was that it seemed like a lot of money was being paid for this work,” says Douglas today. “I wanted a ‘spot forensic’ to see if the work we were being charged took that amount of time. But we couldn’t get any answers from Ted.”

‘Ted’ was Ted Darcus, the imperious chairman of the LCCCA board, who consistently and often rudely denied the public and even board members access to itemizations supporting the invoices, saying they contained confidential information and would not be available as long as there was ongoing litigation.

In June of 2006, Deb Hall, whose day job was then president of the Ephrata Chamber of Commerce and who was a former paralegal, introduced a resolution to hire an independent legal auditor to review the Stevens & Lee bills. The proposal was voted down by the majority of the LCCCA board.

It seemed the entire opposition to the project was focused on the Stevens & Lee invoices. Former Lancaster city councilman, Luis Mendoza, wrote (with Field’s assistance) multiple letters to the editor and appeared at LCCCA board meetings demanding the full release of the invoices.

The always entertaining Ron Harper, Jr., in his inimitable fashion, also demanded the bills release. Harper appeared at LCCCA meetings with a large cardboard cutout of Espenshade. Harper would make his remarks with his arm around “Flat John,” as he asked the non-responsive Espenshade about the bills during the public comment portion of the meetings. This never failed to garner laughs, even from Darcus and other project supporters.

Craver, the former general manager of New York’s Plaza Hotel, had written a published letter to the editor to one of the Lancaster Newspapers in which he criticizes the project’s lack of a feasibility study, financing, and the administration of the LCCCA board under Darcus. Craver copied his letter to the Governor and Attorney General.

What Field, the dissident LCCCA board members, and others questioning the Stevens & Lee bills did not know at the time, but subsequently learned, was that the firm had personnel working full-time on the project, and were its de facto developers and managers.

The time and energy the opponents to the convention center project devoted to the Stevens & Lee invoices was misplaced. During this period, the first six months of 2006, important contracts were being drafted, and they were being made without scrutiny.

Several-hundred page of agreements were dropped off with LCCCA board members with only a couple of days for close reading before voting. Both Douglas and Hall routinely had their own 45+ hour work weeks around which they had to schedule LCCCA duties including, on this occasion,  analysis of the complex legal and financial documents.

Key agreements concerning bond financing; architectural design; shared space between the hotel and convention center; naming rights; permit waivers; consultant contracts; demolition of historic property and others were rammed through by Darcus with the votes of the other three city appointees over the pleas for more time to review by the county appointed minority.  Thereafter, the agreements were overlooked as the opposition focused its limited resources on the Stevens & Lee invoices.

TEMPORARY INSERT FROM WWW.LANCASTERFIRST.ORG  : 

Ties that Bind

At the end of March in 2007, the Lancaster County Convention Center Authority sold $64 million in construction bonds. This permitted the construction of the taxpayer-financed hotel and convention center project – which was already under way – to legally proceed. Those who are behind this project act as if this bond sale means the hotel and convention center project is now free to be an unqualified success.

It is not.

Please consider the agreements upon which dictate the ownership and operation of the hotel and convention center (a collection of which are available for download at: www.LancasterFirst.org). Many of these agreements clearly take advantage of the LCCCA, which is completely funded with taxpayer dollars. Together, these agreements clearly represent abuse and misuse of our taxpayer dollars.

For example:

The “Declaration of Condominium” agreement, dated March 27, 2007, includes the following excerpt from section 2.2(m):

“Convention Center Unit” means Unit number 1 to be owned by the LCCCA which will consist of the following areas of the Property and the Building currently constructed and to be constructed on the Property, as more specifically depicted on the Plats and Plans:

(i) All Interior areas on the Watt & Shand Meeting/Administration Level;

(ii) All Interior areas on the Watt & Shand Ballroom A Level, except the Hotel Business Center;

(iii) All Interior areas on the Watt & Shand Ballroom B Level;

(iv) Those Interior areas on the Watt & Shand Lobby Level identified as Kitchen (and notwithstanding anything to the contrary contained herein, including Kitchen equipment), Mechanical and Sound Control Room

This clearly means that the LCCCA will pay to build, own, and maintain areas which will also be used by the Penn Square Partner’s “private” hotel. Note that even though the hotel will use the only kitchen in the entire complex 80% of the time, taxpayers are being forced to pay for 100% of its construction and maintenance!

Section 5.3(a) spells out how proceeds from the sale of “naming rights” for the convention center will be allocated:

…fifty percent (50%) to the Unit Owner of the Convention Center Unit and fifty percent (50%) to the Unit Owner of the Hotel Unit.

The “Hotel Unit” being, of course, Penn Square Partners.

But it gets better. Section 5.3(b) says:

S. Dale High (who may nominate High Industries or any affiliate thereof to exercise the rights granted in this Section 5.3(b)) shall have a right of first offer with respect to all Naming Rights.

Why does S. Dale High have ANYTHING to do with the LCCCA’s convention center?

And that’s not all.

The “First Amendment to Joint Development Agreement” dated March 28, 2007 includes in section 1(c) a lengthy passage that describes the allocation of any additional State funds for the project. Other than a $1.5 million grant to the LCCCA promised by State Sen. Gib Armstrong (and still not delivered as of this writing), additional State money is first to be used to support a complex collection of contingency funds. However, this section closes with this statement:

…any additional funding received (other than the Additional State Grant) shall be equally allocated between RACL/PSP and LCCCA to be utilized in accordance with this Agreement.

In other words, half of all additional money which comes to the LCCCA must be handed over to the Penn Square Partners.

To add injury to insult, section 2(c) states:

The capital expenses required of PSP as defined in the Modification of the King Street Garage agreement between the City of Lancaster Parking Authority and PSP dated March 28, 2007 shall be allocated in this Exhibit as either Parking Connector Costs or Garage Renovation Hard Costs and shall be allocated 100% to the Convention Center Unit.

This means the Penn Square Partners’ share of structural modifications to the existing King Street Garage (which will primarily be used by patrons of the PSP’s hotel) must be paid for by the LCCCA – with taxpayer dollars.

As these and many other examples demonstrate, this “private-public partnership” clearly favors private gain over public benefit. We the people are on the receiving end of a very bad deal.

As long as these agreements stand, it doesn’t matter how “successful” the project is claimed to be; we are ultimately the losers.

In addition to the above, and perhaps the most grievouse injustice, was the paltry amount of commissions that PSP were required to pay for all the concession rights at  the convention center.  They paid 5% instead of the industry standard of 20% to 30%.  

Robert Field, with a well-earned reputation for unsparing and often harsh criticism of the foibles of others, is equally blunt with his self appraisal:

“The big mistake was that we did not voice objections at the very next meeting after having thoroughly reviewed the one-sided agreements. Instead we took the Stevens and Lee invoices bait!

“We [the opposition’s leading figures] were all working independently and were not even necessarily congenial. There were no gatherings to discuss what we should do, no lawyers or public relations consultants to guide us, no word coming down from the top…

“The Stevens & Lee invoices issue seemed to suggest ongoing corruption as did the almost million dollars paid to Daniel Logan for services that remain obscure. It took until the end of litigation and the obtaining of the data behind the invoices before we recognized that Stephens and Lee with other high priced consultants were actually running the show on a daily basis.  It helped explain whyTed Darcus and David Hixson would not allow discussions at the meetings.  They were but bystanders!”

If the sponsors “out-smarted” Field and other critics, they were richly rewarded for their efforts. The agreements that were passed without close examination put a lot of money into the sponsors’ pockets, money that came mostly from county and state taxpayers.

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Chapter Forty-five: January thru June 2006 TimeLine

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Updated: August 4, 2016 — 3:55 pm
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