Will AG Kane next investigate Lancaster Convention Center ‘miracle’?

The following is excerpted from the NewsLanc Convention Center Series, Chapter Twenty-One Revised: Another ‘miracle’ rescue. The time is July, 2006.

By: Christian Hart-Nibbrig

…Combined with the other re-opened bids, the project again found itself at least $20 million over budget.

With the news of the bid overage, as it did on earlier occasions, Penn Square Partners and Lancaster Newspapers immediately implied imminent death for the project.

“Bids doom center plans: Penn Square Partners says $20 million ‘gap too great,” lamented the Intelligencer Journal in its front page headline.

“It’s a sad day,” Jack Buckwalter, chairman of Lancaster Newspapers Inc., was quoted in his own newspaper. “One could say we are still going to try, but it is very unlikely at this juncture. Dale (High) and I said this afternoon there’s nothing we could have done differently.”

(In 2005, after Penn Square Partners TIF tax abatement plan was defeated by the School District of Lancaster, Buckwalter said: “We are very disappointed. …It appears that we cannot proceed under the conditions as set by the school board. So the project very well at this juncture could die.”)

Other sponsors were equally morose about the future of the project.

“This is going to be a major decision,” said LCCCA chairman, Ted Darcus. “We have to make that as a unified group.”

“It is unlikely that we can organize any combination of resources and strategies that will allow us to move forward with the project as currently designed,” said Penn Square Partners spokesman Tom Smithgall.

Project sponsors blamed County Commissioners Shellenberger and Henderson for the project’s financial problems.

“The actions of the county [commissioners] have poisoned the well, and they continue to threaten frivolous lawsuits to delay the project,” said Mark Fitzgerald, a vice president with Penn Square Partners. “They wanted to kill the project.”

Buckwalter indicated he spoke to members of the Steinman family, owners of Lancaster Newspapers, about the project’s apparent demise.

“They [the Steinman family] are extremely disappointed that this project, which would have been so beneficial to the community, cannot proceed,” Buckwalter said.

Lancaster Mayor Rick Gray, after his early vacillations, said he was disappointed the project appeared to be dead. He now promised the city would try to find a new developer for the Watt & Shand building.

“I want to go nationwide and see what we can do,” the mayor said. “I want to hear everybody else’s ideas.”

Former Mayor Charlie Smithgall, present for the conception of the project on Penn Square (and instrumental in the first ‘miracle’ rescue), sounded like he was going to cry.

“That building [Watt & Shand] is the heart and soul of Lancaster County,” Smithgall said. “Penn Square Partners took it over to make it a better thing for the city, and … the abuse they have taken by uneducated people that don’t see the long-term benefits for the whole county was terrible.”

Even an Intelligencer Journal columnist, the veteran Jeff Hawkes, pronounced last rites over the project. “The project is too controversial and divisive to go forward,” Hawkes, a project supporter wrote. “This project is in need of a mercy killing.”

Commissioner Molly Henderson was gracious, but blunt.

“The risks outweighed, by far, any potential benefits here,” Henderson said after the overage was announced. “I have always been concerned about the taxpayer risk and the imbalance in the public-private partnership. The risk and the expense have been too great for the project.”

LCCCA chairman Ted Darcus was somberly philosophical. “This day shall pass,” said Darcus. “There’s something else that will arise.”

Reports of the convention center’s demise were greatly exaggerated… again.

The very next day, July 28th, the project, after being pronounced dead, the Lancaster New Era blared an optimistic headline:

“The search for $20M: Can they beat the clock?

A wide array of officials scrambles [sic] to make bid deadline

in effort to rescue Penn Square project.”

The article reported that Lancaster Mayor, Rick Gray, had called a meeting of “local and state officials” to try to find ways to fill the $20+ million hole. The “clock” referred to a deadline of August 15th to approve contracts, or the bid proposals would expire.

State Representative Mike Sturla was at the July 28th meeting, and said to the Lancaster New Era: “Telephone calls are flying back and forth by the hour. Schedules are out the window. We’re searching everywhere for the money.”

Two weeks later, on August 11th, 2006, Lancasterians picked up their morning Intelligencer Journal and saw, in headlines usually reserved for the beginnings or endings of wars, that the $20 million budget overage had been solved.

“CENTER CLOSES FUND GAP: DEVELOPERS TO INCREASE THEIR STAKE”

In keeping with the life-or-death, resurrection imagery favored by project sponsors, the lede from the Intelligencer Journal’s Dave Pidgeon reads::

“Lancaster city Mayor Rick Gray announced a plan Thursday to keep alive a hotel/convention center project by plugging a $20 million funding gap.”

According to both the Intelligencer Journal and the Lancaster New Era, the “plan” was to fill the $20 million hole by:

Lancaster Newspapers using $7 million of its own money to build a parking garage, plus loaning the Lancaster Parking Authority $3 million in an “interest-free” loan.
Penn Square Partners investing another $1million
Charging $2 million for “Naming Rights” to the center
Shaving off $5.25 million for “Value-engineering”
The Historic Preservation Trust giving $3 million to the center
Saving $1.5 million from favorable interest rates from a $14 million construction bond to be floated by RACL.
The “plan” announced by the Mayor was immediately met by howls of criticism from project opponents.

Commissioner Dick Shellenberger said, “It’s not right to count the garage as savings when it wasn’t in there in the first place.”

Lancaster First, the citizen organization started by Randy Carney, Ron Harper, Jr., and April Koppenhaver, said in a public statement at the time that the plan was “Smoke and mirrors”:

The Lancaster First statement read in part:

“1) The $7 million in savings from the parking garage, now to be funded by Lancaster Newspapers, Inc., was never part of the original budget, and therefore can’t be counted as reducing the deficit.

“2) The $3 million pledged by the Historic Preservation Trust is raiding the money allocated to create an educational museum.

“3) The $5.25 million in ‘value engineering’ – which has been undertaken several times before – can only result in a substandard facility which will lack aesthetic and result in much higher operating and maintenance expenses.” (This would become apparent upon the completion of the project.)

“4) The $2 million for the ‘naming rights’ is sheer conjecture.” (As of March, 2013, not a cent has been achieved, perhaps in part because of the contract by which S. Dale High, as an individual, is given certain naming rights preferences.)

Lancaster Newspapers did not note that some of the money used to ‘rescue’ the project meant that other worthy city projects would be denied funding. An important one was the Lancaster Public Library which served about 1400 persons daily. It had been promised $3 million in state earmarked funds towards a renovation and expansion plan. The funds were re-directed to paying convention center cost overruns. As a result, the library cancelled its plans after having spending several hundred thousand dollars for design and preparation for a public fund raising campaign to supplement the $1.5 million pledged by a private party.

But libraries and other civic concerns were not the bother of project sponsors. With the budget gap ‘filled’ and a majority rubber stamp awaiting them at the LCCCA, the sponsors knew that this battle, perhaps the crucial one in this bitter war, was over.

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