At a specially convened news conference, County Commissioner and Vice Chair Scott Martin announced that his plan for refinancing the terms of the Convention Center will move ahead by July 1 but Penn Square Partners (PSP) has declined to participate.
PSP is a partnership between subsidiaries of Dale High’s companies, the General Partner, and the Lancaster Newspapers, Inc., a limited partner. PSP is the lessee and equitable owner of the Marriott Hotel.
Martin said there would be no side agreement as demanded by PSP with it and the Lancaster County Convention Center Authority (LCCCA) for the remaining 95 years of their condominium agreement. It would have required the LCCCA to guarantee set payments each year towards renovation and marketing reserves.
Such an arrangement would have made failure to set aside such funds a default under the new terms of the bonds and, if that occurred, triggered the commissioners’ guarantee of the convention center bonds.
Without the side agreement, PSP has declined to be part of the arrangement and will not be contributing approximately $100,000 annually through various concessions as previously contemplated.
Martin was “hopeful” that the other parties to the negotiations – the Pennsylvania Dutch Convention & Visitors Bureau (CVB), the Convention Center Authority, Wells Fargo Bank and the County Commissioners – would approve the arrangementsby the deadline of the end of the day on Tuesday, July 1. The Commissioners will vote on the matter at their Work Session earlier that day.
Martin pointed out that, even with PSP not participating, the arrangement accomplishes many things:
No side agreement as requested by PSP of LCCCA,
There will be $5 million from a City Revitalization and Improvement Zone (CRIZ) towards a reserve fund for renovations,
Avoidance of a potential default on debt by LCCCA,
No raise in the Hotel Room Sales Tax,
A lower interest rate than otherwise would have been charged ($670,000 in savings annually), and
An arrangement for five years with bond and SWAP owner Wells Fargo Bank.
Martin referred to the consequences of not doing anything. LCCCA would be in technical default under terms of the bond agreements.
According to a communication from Wells Fargo on June 14, the default interest rate would leap to 10%. Martin said that would amount to $6 million annually just for interest, a large part at tax payers’ added expense. He noted that the Hotel Room Sales Tax last year only generated $5.1 million in tax revenue.
Martin said there is no pre-payment penalty under the arrangement and, should a better financing opportunity come along, the parties could avail themselves of it. Concerning the relatively short five year term with the bank, Martin opined: “Like ‘Ground Hog Day’. We keep waking up to it.”
Kevin Malloy, Executive Director of the LCCCA, said that the arrangement for the next five years achieves their #1 priority: “sustainable financing.”
When asked from the audience “With CRIZ contributing $5 million and the county guaranteeing the full bond debt, how can the citizenry not perceived PSP as the ‘bad guys.’?” Martin refused to characterize PSP other than to say this was a very complicated matter.
Prior to the meeting, Martin told NewsLanc: “I made the best lemonade I could out of a bunch of lemons.”
EDITOR: More to come Also see CONVENTION CENTER UPDATE WITH POSTSCRIPT
If they were smart, which they are not, all other parties should withdrawal support. No PSP concessions, even the measly ones originally included, no deal. Let it die under its own weight.
What happened to, If all of the party’s don’t agree to the terms of the proposed agreement the deal is off? Looks like without PSP’s proposed contribution, it will become more likely that the taxpayers will be left holding the bag for this fiasco. I say NO to this deal. Lets see if Wells Fargo really wants to own a convention center.
PSP should be RUN OUT OF TOWN (WAY OUT OF TOWN!!!). They have NO sense of community involvement; only a lust to fill their own pockets at the expense of the hard-working City/County taxpayers. The founding fathers of LNP must be rolling in their graves….what a blow to the Steinman legacy of community goodwill.
It would be better to let the Convention Center go bankrupt, and let the chips fall where they may.
LNP can spin this ’til the cows come home…..They have just stuck it to us again.
It is interesting to note just how much the “naysayers” got right. Project opponents appear to have been more accurate in their predictions than project supporters.
EDITOR: The “naysayers” were not just ordinary members of the general public but included highly regarded local and national hospitality industry authorities.
In addition, the marketing reports that were made public (but only in ‘cherry picked’ versions) were highly negative, pointing out the project had become bloated, was not well served by transportation, and was poorly located.
Whatever the original good intentions or at least the Steinman family at the birth of the vision, this became simply a business opportunity for counsel Stevens & Lee who earned over $8 million in fees (and continue earn fees), the High Group, the Lancaster Newspapers, Inc. and others who also got to feed at the public trough.
The public was not fooled, despite all of the deception by the sponsors. The clear wishes of the public were simply disregarded. The Fox 47 poll by a national firm indicated that 78% of the Lancaster public opposed any form of public guarantee of the project.
It is especially galling that the Lancaster Newspapers, Inc. has never publicly apologized for its willful part in this debacle and, even now, refuses to give up any of its ill gotten gains in order to keep the center afloat, despite the contributions the other parties.