Courtesy of LookingAtLancaster.com
June 18, 2009 was a cloudy and dismal day in downtown Lancaster, PA. Perhaps this was appropriate for the long-delayed ribbon-cutting ceremony held the day before the official opening of the taxpayer-financed hotel and convention center project. Even more appropriate was the location of the ceremony, held indoors where it was shielded from the light of day, inside the tax-exempt hotel which was used so often by the private “partners” to squeeze more and more concessions from taxpayers.
When the construction bonds for the convention center were sold at the end of March in 2007, the opening date was announced to be on March 1, 2009. Repeated unexplained construction delays resulted in an opening that was one hundred and ten days late.
At the same time, it was announced that the “final” cost of the project would be $177.6 million; no explanation was given as to where the additional funds would come from. Invoices from contractors and vendors are likely to still be submitted for quite a few weeks, so it is possible that the final cost will be even higher.
There is no doubt that the hotel and convention center project will generate a fair amount of economic development in downtown Lancaster. But at what cost?
Over $140 million taxpayer dollars – plus interest – is a LOT of money to create two to three hundred low-paying service jobs, especially considering that the cost to keep the convention center open – including lost real estate tax revenue – will amount to several million dollars every year, basically forever. This amounts on a negative return on investment, no matter how the facts are spun.
To add insult to injury, as of June 18, 2009 the convention center has only booked a little more than half of the total revenue which was expected for the 2009-2010 fiscal year. At this late date, it is highly unlikely that any more major events will be booked before the current fiscal year ends on March 31, 2010.
Particularly weak has been the market for “other” events: competitions, galas/ceremonies, entertainment, and meetings/conferences. As of June 18, 2009 only 29.1% of expected business had been booked for the current fiscal year. This is most likely because the vast majority of smaller events are being booked in the hotel’s space by the joint manager of both the hotel and convention center. A certain amount of this may be attributed to groups booking hotel rooms that are given the use of meeting space for free, thereby avoiding the convention center’s booking fees.
Looking beyond March of 2010, things look even worse. “Other” events booked are above expectation, only because of one large “competition”. But the real money makers are “tradeshows”, which are booked from 12 to 36 months in advance; only a single one-day event has been contracted for the next fiscal year, and into the future.
(These facts and figures were taken from Interstate Hotels and Resorts’ presentation to the Lancaster County Convention Center Authority’s Public Relations, Marketing, and Hospitality Committee on June 18, 2009, which can be downloaded at this link)
Further clouding the future of the convention center is the announced resignation of LCCCA board chairman Art Morris at the end of July 2009. Former Lancaster mayor Art Morris brought an accountability to the project which was lacking throughout its previous history. As acting executive director of the project in 2007 (a position which he had volunteered for), Art Morris – working closely with fellow board members R.B. Campbell and Laura Douglas – uncovered millions of dollars in deficiencies inside the construction budget which was created by his predecessors. Mr. Morris was able to prevail upon former State Sen. Gib Armstrong to come up with yet another three million State taxpayer dollars in an attempt to make ends meet.
Art Morris leaves the hotel and convention center project at a critical time: not all of the construction bills are in yet, and no one knows exactly how much money the convention center will lose now it is operation. Whoever replaces Art Morris as LCCCA chairman will likely soon find themselves begging the County Commissioners to increase the “hotel tax”, in order to keep the convention center open for business.
The downtown Lancaster, PA taxpayer-financed hotel and convention center project has been controversial ever since it was first proposed in mid-1999, ten years ago. In spite of heavy “spin” by project supporters and the local mainstream media, this project will remain controversial for the remainder of its existence.
