The word of the day is SWAPS. Of course you did not read about them in this LNP article or hear about them in the PDCVB report or presentation. Al Duncan’s fifth grade statement on variable rate financing and public projects attempts to gloss over the real cause…SWAPS. Derivatives. Financial instruments that most on the LCCCA board who have voted their approval have not a clue as to what they approved.
Why didn’t we hear that word this week? Because the PDCVB has remained basically scared and silent throughout most of the process. Instead of standing up as a voice of reason, they sat back and watched while the Pickard and Darcus “lead” LCCCA followed their “advisers” John Esbenshade and Tom Beckett down the primrose path.
Ever wonder exactly whose interests Mr. Esbenshade’s counsel really benefited?
The LCCCA’s mantra, we will build this thing at any cost and under any terms have brought us where we are today, an overpriced and useless project that we cannot afford. Their has been a total lack of leadership and common sense at all levels of State, County and City government, and from private industry organizations such as the Chamber and PDCVB, throughout the history of this project.
The only attempt at real leadership came from Dick Shellenberger and Molly Henderson, who were then quickly vilified and dispatched by PSP partner and propaganda arm LNP. Ever wonder what might have happened if the 56 questions actually got answered truthfully?
Don’t hear too many statements these days from the likes of Paul Thibault, Charlie Smithgall, Gib Armstrong or Art Morris, just to name a few. They all pushed not only “if you build it they will come” but also “no cost is too high when we try to please (Dale) High”. And so we did.
We all watched as the LCCCA paid fees and more fees to financial advisers and institutions for SWAPS and more leverage and more SWAPS and then more fees and more SWAPS and we are now headed to towards a cliff. No principal has been paid. No reserve for replacement has been set aside. And now, a refinancing is on the horizon where interest rates may more than double.
Mind you, this is all during a period of time with historically low rates for those who build within their means. Yes folks, the word of the day is SWAPS and don’t let anyone else tell you otherwise and remember it the next time you hear that term used by a governing body that taxes you. SWAPS. SWAPS. SWAPS.
Utilizing interest rate “swaps” is the only way this project could have been financed as built. The convention center is far too expensive to be justified by a market the size of Lancaster’s and the revenue of the “hotel tax”. The construction bonds are so highly leveraged that conventional financing became completely out of the question, there is simply far too much risk.
Had some variation of the original project been built, it might have been feasible. The Queen Street lobby alone, with its costly marble and wood finishes accompanying a massive glass wall and outrageously high ceiling, is far too grandiose and expensive to be justified by the overall capacity of the “integrated facility”. Forcing taxpayers to pay for ALL of the hotel’s meeting space AND its restaurant adds insult as well as injury to the people of Lancaster.