Different law firms represented the parties to the contracts among Penn Square Partners (PSP), the Redevelopment Authority of the County of Lancaster (RACL), and the Lancaster County Convention Center Authority (LCCCA), and it is not the intention of this article to question the integrity of the law firms. However, consider that subsidiaries of the High Group had acted as convention center project developer and chief planner and strategist, as project manager, as fifty percent equitable owner of the Marriott Hotel, and as the major contractor for the construction. The relationship among PSP, RACL, The City of Lancaster and the LCCCA was so intertwined that the parties were inclined to go along with requests by Penn Square Partners and its general partner’s principal S. Dale High. Evidence of this is the agreements contained provisions which are virtually unprecedented among organizations dealings at arms’ length and devoted to the public’s interest.
Below are outstanding anomalies:
1) Penn Square Partners was only fronting $11 million dollars, in a form that remains unclear, towards the $72 plus cost of the hotel while the rest of the rest of the funding was either public funds or loans guaranteed by the RACL and the City of Lancaster.
2) Despite only an investor in the Marriott Hotel, Penn Square Partners claimed half of any additional funds contributed to the state for the convention center portion of the project.
3) Penn Square Partners was to receive 50% of the proceeds from naming rights to the convention center, even though their investment was strictly in the hotel
4) Furthermore, LCCCA agreed to the shameless demand that S. Dale High as an individual should have certain first claims to acquiring the naming rights to the convention center, a provision that would discourage other bidder and prevent the auctioning of the rights to the highest bidder.
5) A High Group subsidiary was awarded the food concessions contract at the convention center and was only required to pay 5% of revenue up to a threshold figure and 10% commission thereafter rather than standard industry practice ranging from 20% to more than 30%.
6) Significant facilities to be utilized by the hotel were provided at the cost of the convention center. According to Taxpayer Tragedy by ‘Artie See’ in the Lancaster Post, “..parts of the buildings that are being built and will be maintained by the LCCCA, such as the hotel kitchen and ballroom, for which the Penn Square Partners will pay $100 a year to use.”
“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.
7) Although the Project represented three distinctly different economic interests – PSP for the Marriott, LCCCA for the Convention Center, and the common areas with divided ownership between PSP and LCCCA, the entire project was served by only a single electric meter, and with no provisions for submetering. When queried by NewsLanc, they said this was on the instructions of High executive Tom Smithgall at the time that High was Project Manager. When this was brought to Smithgall’s attention, he said he would have to ask around and never responded back to NewsLanc.
Studying the plans and agreements among the parties was a formidable task. Chair Ted Darcus gave the LCCCA board members the documents less than two days before the meeting. The City board members joined Darcus in voting down the county appointees’ request that the approval of plans be held over to either the next board meeting or an earlier special meeting to allow them to perform their due dilligence of review the material.
8) The multi-story large break out area in front of the convention center exhibition center is continuous with the lobby of the Marriott with no provision for closing off the areas, thus requiring the wasting of huge amounts of energy at high cost to heat and aircondition the vast area despite the convention center only being in use a small fraction of the time. This particular design flaw would seem to be a sign of questionable competence.
“This clearly means that the LCCCA will pay to build, own, and maintain areas which will also be used by the Penn Square Partners.”