According to the Convention Center Authority, the deficit each year amounts to approximately $500,000, largely because of a shortfall in projected revenue from the Hotel Room Sales Tax. (It reportedly has a cumulative short fall of over $2 million.)
What would have been a greater loss is somewhat offset by lower interest rates due to the slowdown in the economy. The lower interest rate might have totally offset the loss of revenue had not an unfortunate SWAPs deal set a minimum future interest rate (as well as a maximum rate.) We believe this derivative arrangement was made in large part to maximize the amount of financing and to help cover some of the reported $20 million “gap” that was made to suddenly disappear, in part by various disingenuous slights of hand, emasculations of essential aspects of the design, and one downright falsity. (Mayor Rick Gray got suckered into making the phony announcement.)
Nevertheless, a $500,000 deficit could likely be offset if the one sided, exploitive conditions in the condominium and leasing agreements favoring Penn Square Partners were corrected. Since these arrangements underlie the bond issues, they cannot be altered.
The hotel depends upon a healthy Convention Center to generate a substantial portion of its room nights. It would almost certainly lose several times $500,000 each year were the Convention Center to significantly curtail its marketing and operations, or enter receivership.
The remedy: Penn Square Partners, subsidiaries of the Lancaster Newspapers, Inc. and the High Group, should gift the $500,000 each year. It would not only be the ethical thing for them to do, but also would safeguard their investment in the Marriott Hotel.
Kudo’s to the above opinion/suggestion.!!!
Do our elected officals ever read this website????
This is the type of straight-forward, fair-minded thinking that needs to take place behind government doors!!! And then, they need to take this type of action, not only to protect the Convention Center, but also to protect the city/county taxpayers.
There reality here is that there is no “EXCEPT” that applies. The CC project is paid for by hotel taxes. The CC project is supposed to generate hotel rooms. The CC DOES NOT and is therefore a failure in its primary mission.
Not only doesn’t this project add any significant rooms to the marketplace, the 300 room, taxpayer-financed, private hotel takes away 3 times more rooms then the center adds. In other words, the CC would have to triple its output of overflow of rooms simply to have a break-even effect on the local hotel industry.
This topic is front and center because the LCCCA, as a result of the lopsided agreements with PSP, and many other factors, cannot pay its bills. But even if those agreements were actually fair, and all the other shortcomings from the electric meters/transformers and this and that all fell into alignment, the CC project would NOT be adding any significant number of hotel rooms to the marketplace and that is what makes it a failure… NO EXCEPTIONS!