In a news article titled “Climbing over towering mountain of debt” reports:
“The ‘Fiscal Impact and Recovery Task Force,’ convened by the Pennsylvania Dutch Convention & Visitors Bureau, released its long-awaited report last week and detailed the scope of the challenges facing the convention center. Many of the findings mirrored those of a consultant hired by the authority and its lender earlier this year. Efforts to bring big events to town need to be better coordinated, the task force asserted. The facility could be better utilized — but, as Blaise Holzbauer, of Willow Valley Associates, who chaired one of the task force subgroups noted, ‘We can’t sell our way out of this.’
“For no matter how much business is brought to the center, no matter how drastically costs are cut, the ‘800-pound gorilla in the room,’ said task force chairman Al Duncan, is the center’s debt, and the financing package that’s slowly strangling the convention center authority — and could ultimately hamstring the tourism industry itself.”
WATCHDOG: It is a relief that the reporting assignment on the Convention Center has been returned to Associate Editor Gil Smart after a disastrous week of poorly informed reporting supplemented by biased editorializing.
(Nevertheless, Smart talks in terms of “interest rates” when the cost of financing consists of interest plus fees. It is the exorbitant fees required to guarantee the bonds, plus the costly results of ‘SWAPS’ that set a very high minimum interest rate, plus the high cost of the bloated and ill conceived project that are at the heart of the problem.)
The past contentions of then county commissioners, hoteliers, this publication and other critics of the Convention Center Project could not be better summarized than by the second paragraph above.
When can we expect a ‘mea culpa’ from the Lancaster Newspapers, Inc.? A single editorial clearly accepting responsibility for its sordid role, not just for advocacy but in distortions and abuse of power, and asking forgiveness of former elected representatives and the community would go far to restore comity to our community and confidence in our print media.
Ideally this should be accompanied by a commitment by Penn Square Partners to reimburse any Convention Center losses for at least five years. Given the extraordinary damage done by the Lancaster Newspapers, Inc. and S. Dale High to individuals and the community, this would be the responsible and ethical thing to do.
We are taught it is not enough just to apologize. One must also make amends and promise not to sin again.
Note that this article mentions, then carefully skirts, the real CAUSE of this financial mess. There is note of “the decision-makers who backed the original financing package”, but no questioning of their reasoning or intentions. And it was “asked if the task force had asked Penn Square Partners if it would revisit some of its agreements with the authority that split certain revenues between the authority and the partners”, but again the answer to this question was avoided.
What are people afraid of? Are those who created and implemented this project still so politically powerful that they are able to intimidate community leaders into acquiescence?
The first step toward finding a cure is to identify the disease. Spending more and more taxpayer dollars on a project which is a terrible deal for taxpayers helps no one except those who have already profited handsomely from this fiscal fiasco.
June 10, 2012
Due to a a glitch, we only became aware of this and several other comments this day. We apologize for the late posting.
June 10, 2012
Has anyone ever considered the cost of this project versus its benefit to taxpayers? Consider the millions of dollars of “hotel tax” revenue every year which keep this project in operation and pay for its massive construction debt. There is no evidence that the hotel and convention center combined generates anywhere near that much economic benefit annually in all of Lancaster County.
Add to that an amortized percentage of the nearly $20 million in taxpayer grants already spent on the convention center, plus the nearly $45 million in taxpayer grants provided to the TAX-EXEMPT “private” hotel. The return on investment to taxpayers of this “integrated facility” is a rather large negative number.
Following your lead, I attempted to comment through LNP’s Talkback on the swap issue last night. My comments (see below), are still awaiting moderation some nine hours later.
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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.
Public and civic officials continue to debate how to fund the convention center’s massive construction debt with more and more tax dollars while their “private partners” in the hotel continue to enjoy their undisclosed profit, so much of which is earned on the involuntary largess of taxpayers.
How many hotels pay $100 a year for all of their meeting space, their kitchen, half of their lobby, and a variety of other spaces? How many hotels get to pay $35 million over several decades to take ownership a building that cost more than $76 million to build, while paying no real estate taxes at all?
What the downtown Lancaster convention center needs is a level playing field, one where it can stand on its own merits. Every single agreement between the LCCCA, PSP, RACL, Lancaster City, and Lancaster County MUST be renegotiated on a fair and equitable basis for ALL parties involved, including taxpayers. This is the ONLY way the issues surrounding the convention center can be finally resolved.