Brunswick / Lancaster Hotel sold; more tax payer money give away

By Robert Field

An LNP article headed “Meeder purchases Hotel Lancaster downtown for $5.75M” reports in part:

“With the acquisition, a second phase of renovations will proceed, bringing the remainder of the once-idle property back into service.

This will strengthen the hotel’s role as a complement to the Lancaster Marriott at Penn Square for lodging visitors to the Lancaster County Convention Center…

“A key player in making the transaction possible was the Lancaster-based Community First Fund, Meeder said. It joined with The Reinvestment Fund of Philadelphia and The Progress Fund of Greensburg to provide a $6,056,000 first mortgage. That was the biggest loan for the Community First Fund in its nearly 23-year history.”

Hotels don’t complement one another. They compete. Once the Lancaster Hotel has received its full $15 million in tax payer funds (the rest coming from the notorious CRIZ program which borrows to fund special interests against future tax revenue), it will be every bit the equal of the Marriott and probably be reflagged as a Holiday Inn or comparable brand. Two such hotels in the thin downtown hotel market can be ruinous for both. The City owns the Marriott and leases it to Penn Square Partners who are at liberty to give it back, sticking the City with almost $40 mlllion in debt.

Here how the web site for the Community First Fund of Lancaster describes its mission:

“In April 2013, Community First Fund was awarded a $15 million allocation of New Markets Tax Credits (NMTC). These allocations from the U.S. Department of the Treasury are intended for use in low-income communities to stimulate growth and create and retain jobs. Community First Fund has launched three major projects to date utilizing the New Markets Tax Credits.”

So in addition to the $15 million in state CRIZ funds (borrowing to benefit private interests by pledging future real estate tax revenue) we have the further use of tax payers’ money.

About fifteen years ago, the availability of the then Brunswick was brought to the attention of our firm as a potential acquisition.

We inspected the property, inquired about the downtown hotel market, and concluded that we would not invest a single dollar. Subsequently the hotel passed hands and continued to rack up millions of dollars in losses, in addition being allowed to physically deteriorate.

A few years ago I became friendly with the managing partner of the group that ultimately sold the Brunswick to the John Meeder group and sought to arrange a transaction whereby it would be acquired by the City or private interests in conjunction with the City. It is an understatement to say the owners were eager to sell the property and my sense was that it might be had for between two and three million dollars.

I also noted that the adjoining Hess Department Store / Bulova Building had lay dormant for a decade and was under the jurisdiction of the bankruptcy court. Thus there seem to be an excellent opportunity for the City in conjunction with private developers to arrange for the acquisition of the entire square apart from the parking garage, the razing of the hotel, its annex and Bulova Buildilng, and re-development of the site into upscale condominium and other residential units.

(As of this week, the multi-story condo building under construction across the street has a sign ‘bragging’ only two units left!)

I reached out to City Planner Randy Patterson to learn what ideas the City had for resuscitating Lancaster Square East and planned to provide suggestions and perhaps assistance, but not as a developer given my advanced age. Patterson refused to meet and Mayor Rick Gray repeatedly refused to arrange a meeting.

Why did Patterson and Gray repeatedly refuse to discuss the future of Lancaster Square East? Cynics might say some dealings cannot be exposed to light. I don’t think that of Rick Gray who I believe is a man of integrity and in some areas very competent.

Based upon observations of Patterson’s and Gray’s cumulative bungling from Conventoin Center, proposed street cars, Amtrak Station parking and other matters over nine years, I believe that Patterson simply isn’t competent and Gray is both gullible and believes that his expertise in some areas makes him knowledgeable in others. It doesn’t work that way.