One sided agreements between PSP and LCCCA

July 11, 2008

by Artie See for the Lancaster Post

The ties that bind

At the end of March in 2007, the Lancaster County Convention Center Authority sold $64 million in construction bonds.  This permitted the construction of the taxpayer-financed hotel and convention center project – which was already under way – to legally proceed. Those who are behind this project act as if this bond sale means the hotel and convention center project is now free to be an unqualified success.

It is not.

Please consider the agreements upon which dictate the ownership and operation of the hotel and convention center (a collection of which are available for download at: www.LancasterFirst.org). Many of these agreements clearly take advantage of the LCCCA, which is completely funded with taxpayer dollars. Together, these agreements clearly represent abuse and misuse of our taxpayer dollars.

For example:

The “Declaration of Condominium” agreement, dated March 27, 2007, includes the following excerpt from section 2.2(m):

“Convention Center Unit” means Unit number 1 to be owned by the LCCCA which will consist of the following areas of the Property and the Building currently constructed and to be constructed on the Property, as more specifically depicted on the Plats and Plans:

(i) All Interior areas on the Watt & Shand Meeting/Administration Level;

(ii) All Interior areas on the Watt & Shand Ballroom A Level, except the Hotel Business Center;

(iii) All Interior areas on the Watt & Shand Ballroom B Level;

(iv) Those Interior areas on the Watt & Shand Lobby Level identified as Kitchen (and notwithstanding anything to the contrary contained herein, including Kitchen equipment), Mechanical and Sound Control Room

This clearly means that the LCCCA will pay to build, own, and maintain areas which will also be used by the Penn Square Partner’s “private” hotel. Note that even though the hotel will use the only kitchen in the entire complex 80% of the time, taxpayers are being forced to pay for 100% of its construction and maintenance!

Section 5.3(a) spells out how proceeds from the sale of “naming rights” for the convention center will be allocated:

…fifty percent (50%) to the Unit Owner of the Convention Center Unit and fifty percent (50%) to the Unit Owner of the Hotel Unit.

The “Hotel Unit” being, of course, Penn Square Partners.

But it gets better. Section 5.3(b) says:

S. Dale High (who may nominate High Industries or any affiliate thereof to exercise the rights granted in this Section 5.3(b)) shall have a right of first offer with respect to all Naming Rights.

Why does S. Dale High have ANYTHING to do with the LCCCA’s convention center?

And that’s not all.

The “First Amendment to Joint Development Agreement” dated March 28, 2007 includes in section 1(c) a lengthy passage that describes the allocation of any additional State funds for the project. Other than a $1.5 million grant to the LCCCA promised by State Sen. Gib Armstrong (and still not delivered as of this writing), additional State money is first to be used to support a complex collection of contingency funds. However, this section closes with this statement:

…any additional funding received (other than the Additional State Grant) shall be equally allocated between RACL/PSP and LCCCA to be utilized in accordance with this Agreement.

In other words, half of all additional money which comes to the LCCCA must be handed over to the Penn Square Partners.

To add injury to insult, section 2(c) states:

The capital expenses required of PSP as defined in the Modification of the King Street Garage agreement between the City of Lancaster Parking Authority and PSP dated March 28, 2007 shall be allocated in this Exhibit as either Parking Connector Costs or Garage Renovation Hard Costs and shall be allocated 100% to the Convention Center Unit.

This means the Penn Square Partners’ share of structural modifications to the existing King Street Garage (which will primarily be used by patrons of the PSP’s hotel) must be paid for by the LCCCA – with taxpayer dollars.

As these and many other examples demonstrate, this “private-public partnership” clearly favors private gain over public benefit. We the people are on the receiving end of a very bad deal.

As long as these agreements stand, it doesn’t matter how “successful” the project is claimed to be; we are ultimately the losers.