What a change from a decade ago when Lancaster County Convention Center Authority meetings were run with an iron fist, debate was prohibited, discussion among members discouraged, minority members disrespected, and the chair refusing to answer questions from the floor and often disregarding those from the three county appointees representing the minority on the seven person board.
Nothing could be more different these days. The atmosphere among members and the audience is cordial, casual and constructive. Commercial real estate broker Kevin Fry, Chair, conducts the meeting in an affable, unpretentious, and considerate manner. Kevin Molloy, Executive Director, endeavors to answer all questions fully and to the full comprehension of the inquirer. Board members listen attentively to the discussion and do not hesitate to ask questions or comment.
Robert Field, NewsLanc’s publisher, posed the key and only major question from the floor: “What happens after the new five year term that sets the interest rate expires? Will the enlarged county guarantee remain in force or does the added guarantee also end in five years?”
The answer is that enlarged guarantee continues in perpetuity and negotiations with the bond holder Wells-Fargo will have to start anew, but this time there will be little more if anything to offer the bank as an inducement for charging lower rates than what the ill conceived SWAP arrangement permits. (It would cost about $15 million today to unwind the SWAP to enable the Authority to refinance with other sources at market rates. The SWAP limits how high and how low the interest rates are allowed to fluctuate.)
If he were present, Commissioner Scott Martin might argue that the enlarged county guarantee doesn’t really matter. The county gets its repayment off the top of the hotel room rental sales tax. And so long as there is a sales tax, the taxpayers are not at any more risk.
As a practical matter, that might leave the Convention Center Authority without sufficient funds to pay its bills and maintain its standards. This in turn would scare off bookings. So Martin would have us conclude that Wells Fargo’s practical concerns would remain about the same as they are now and they would have reason to negotiate a lower interest rate and other concessions, as they have just done.
Consultant to the LCCCA Steven Geisenberger explained many facets of the “Deal Sheet”, that states the many aspects of the arrangement. Molloy said preliminary form has been online at www.LCCCA.com for the last month. Molloy further indicated that the Resolution that was passed at today’s (Friday’s) meeting, the new agreements, and the deal sheets would be on line by early Saturday morning.
Geisenberger made the point that Authority will save 1.1% in interest rates, which amounts to $670,000 a year times five years. That comes to $3,350,000 over the five year term.
Other benefits will be:
$5 million from in expected state Revitalization and Improvement Zone (CRIZ) grants to go towards future renovations. (We steal future tax revenue from our grandchildren to benefit special interests and cover up folly today.)
Penn Square Partners will contribute $100,000 a year towards marketing.
Penn Square Partners has agree to forgive $50,000 a year of the current $700,000 note it holds from the Authority over the next fourteen years, so long as LCCCA meets its obligations.
There is expected to be about an additional $50,000 per year from Penn Sqauare Partners having to do with concessions. (PSP is still paying a tiny 5% of gross revenues on catering, as opposed to an industry norm of several times that amount.)
The Redevelopment Authority of the City of Lancaster (RACL) is contributing $100,000 a year towards marketing.
And the Pennsylvania Dutch Convention and Visitor Bureau (PDCVB) has given up its 1.1% share of the 5% of the hotel room sales tax for five years.
Kevin Molloy reported that the 2014 bond issue that replaces the bonds issued in 2007 amounts to $63, 590,000
The Board members understood the draw back of the county providing a guarantee in perpetuity while the interest rate formula is only for five years, a 1.1% savings over what otherwise could have been charged. However, it was the view of board members that Commissioner Scott Martin had fought a long and tough battle and left no stone unturned in negotiating the concessions achieved from Wells-Fargo and the interested parties, and no good would be served by the Board refusing to go along.
The approval of the Resolution was by unanimous vote.
Afater the vote, Geisenberger volunteered that the interests rate from the outset would have been lower had the commissioners agreed originally to guarantee the total loan. This brought Field to say there would be no problem at all had the then commissioners had their way and, based upon the PKF Feasibility recommendation, caused the project to be “downsized or another use found for the site.”
