In order to ensure that at least some of the issues that must be addressed are brought into the open, we three would like to present, for all to see, deep concerns about the legal and financial deals that will affect every citizen in the city and county.


In the following pieces, each of us tries to bring up primary issues of concern, even though there are many more that should be addressed.As the three new county appointees to the Lancaster County Convention Center Authority Board, we have been asking lots of questions about the project, its status and its structure. We see this as our fiduciary duty to the board, the authority and the taxpayers of Lancaster city and county. We are given agendas, previous meeting minutes, and all documents to be voted on too close to the day of the board meeting.


When we challenge specifics of any issue, we are told to address such things in private and our concerns are ignored.As the three new county appointees to the Lancaster County Convention Center Authority Board, we have been asking lots of questions about the project, its status and its structure. We see this as our fiduciary duty to the board, the authority and the taxpayers of Lancaster city and county. We are given agendas, previous meeting minutes, and all documents to be voted on too close to the day of the board meeting. When we challenge specifics of any issue, we are told to address such things in private and our concerns are ignored.




From Laura Douglas




Who is running the LCCCA Board? And who is actually running the convention center project? It certainly is not the board.


As a business owner, the entire management of the project appalls me. The board as a whole is kept completely out of the loop except to rubber-stamp whatever is put before it. Friday, Nov. 25, Reynolds Construction Management announced in the Intelligencer Journal the invitation to bid on the demolition and stabilization of all the sites for the convention center and hotel. The bids are due to be opened Dec. 22 — after this month’s board meeting. Demolition is scheduled to begin March 30.


If previous history is any predictor, the bids will, then, be reviewed by people with a vested interest in the outcome and people with neither understanding of construction costs nor a budget or feasibility study against which to measure the bids. But they will make recommendations, anyway, and expect the board to rubber-stamp their decision, here again long before we know if we can even afford the project as it currently stands.


One additional concern is the fact that, according to the calendar, the Stabilization start date is Monday, Jan. 2 — BEFORE the January board meeting in which, I believe, the contract is to be awarded. Does this mean that the stabilization part of the bid will be awarded without board approval or begun, again, before we know we have sufficient funding to proceed?


There might be those who buy into the idea of, “If you build it they will come,” which has been shown to be dangerous and false in every other similar project in the country. But with such a limited scope in the design of the facility, there must be a limit of costs beyond which the city and the county cannot go without ultimately risking not only bankruptcy of the project, but possibly of the municipality, also.


I spent many hours reading the material provided, finally, as a result of my repeated requests: minutes of past board meetings, current agreements, and, most importantly, the proposed final agreements between Penn Square Partners, Redevelopment Authority of the City of Lancaster and the LCCCA. To my astonishment, my questions and challenges to the agreements were met by some of the “experienced” board members with disdain and insults. A subsequent editorial in the Intelligencer Journal defended my actions and upheld my right to ask questions publicly.


There are serious flaws in these documents — things that no prudent businessperson would permit. And yet, three of the board members actually admitted to not having read them at all. Only we three new appointees made any attempt to read or understand the provisions of these critical documents. For example, none of the board seems to realize that the LCCCA is completely responsible for all cost overruns. That means that unless a particular change order is initiated by PSP, any increased cost falls to the taxpayers of the city and the county. The convention center authority has no actual control of the project. PSP has the control; the convention center authority has the responsibility. This clearly puts both the city and the county in serious financial jeopardy — not just for now but for 30 to 40 years into the future.


The board is being pushed to vote on an extremely risky swap option at the next board meeting of Dec. 14 — long before we have the construction bids to show whether we can afford to build the project. Interest rates would have to increase at multiple times the rate at which they have been increasing over the past few months to offset the payoff to get out of the option. To get out of the option would cost more than two years of the entire income of the authority. Why must we vote on it or opt for it now? Why are we not waiting until the bids are due back in February?


I have one additional, two-part question for all parties involved in this project. How much additional new business and additional jobs will be required in the city to generate enough taxes each year to offset the annual loss currently projected, which, in a best-case scenario, is more than double the revenues from the hotel tax after deducting current authority operating expenses? And, where is that business to come from?


Each time I ask that I am blown off, scoffed at, or insulted. It is a simple question that anyone with any fiscal sense of responsibility would ask.


That is what this entire project seems to lack ­— a sense of fiscal responsibility




From Jack Craver




The proposed Marriott Hotel is now to be a “full-service, business-class or first-class hotel,” according to the documents approved at the last LCCCA Board meeting Nov. 9. First class does NOT mean 4 Diamond. The definition of 4 Diamond hotels can be found at www.aaa.biz/adsales.

Numerous first-class facilities already exist throughout the county. These include Willow Valley, Eden Resort, Host Resort, Hilton Garden Inn, Courtyard by Marriott, Hampton Inn and the Holiday Inn.


The intent, as initially defined by PSP, was that the 4 Diamond facility would differentiate itself from all other facilities in the county and enable the 4 Diamond facility to draw, a so-called, new market to the area. Without the 4 Diamond rating, how will the new hotel command room rates significantly higher than their competition? This is not what the community was promised.


The revenue streams of the hotel tax, rental of space in the convention center, and the 5 percent food-and-beverage commission paid by the hotel operator, will not be sufficient to cover the debt service and the operating expenses of the convention center. The LCCCA should be earning 15 to 20 percent from the concessions in the convention center, but is only going to be earning 5 percent with the balance going to PSP. The higher commissions would help to reduce the loss of the convention center. It is interesting to me that the operating revenues, as well as the financing, are structured to benefit PSP at the expense of county taxpayers.


The Interstate Hotels Corp. that will operate the Marriott made it a condition of its engagement that it also had to operate the convention center. It has stated that is the only way it can work successfully.


As an experienced hotel operator and provider of technical services to hotel developers, I can say that the reason behind this is that, in order for the hotel to have a chance to make a profit, the convention center needs to be operated to benefit the hotel. Preference will be given to hotel events and bookings that emphasize room business for the hotel.


This is not all bad in that people staying overnight or longer than one night generate more revenue for the city and surrounding areas. But rest assured that the principal reason is to ensure generating enough or more than enough income for the hotel. As a result, the well-being of the convention center, which has always been projected to lose money, will have second priority.


As much as the world has changed in the last five years, we owe it to city and county residents to do a true feasibility and economic study before the bids are due back in February or March. Such a study would show the best-case, worst-case and most-likely scenario on the profitability or expected losses of both the hotel and convention center. Such a study would also show the expected bottom-line effect of increased construction costs and interest rates. An added benefit would also be the analysis of the required increase in tax revenues to offset the anticipated losses of the convention center.


This project should not proceed without such a study financed, at least in part, by PSP. Financial institutions do not provide financing with recent (less than 1-year-old) financial projections. The incomplete studies done on this project are 3 to 5 years old.


If PSP will not conduct and fund such a study performed by a qualified, impartial firm to be selected by five county citizens, then the project guarantees provided by the county taxpayers should be immediately removed. However, that can be possible by the county commissioners. Let’s think about what we are about to do before it is too late.




From Deb Hall




After my appointment to LCCCA Board, I made it my job to become knowledgeable about as many aspects of the project in as short a period of time as is humanly possible.


The first task I undertook was an understanding of the manner in which the authority itself conducts its affairs, particularly those of a financial nature. What I have found is a total failure to adhere to standard business practices. First, the manner in which income and expenses are tracked and reported requires scrutiny. Despite my requests, I have received no information on actual income received by the authority for the 2005-2006 fiscal year that began April 1.


Based on the budget provided to me by the authority staff, I have been able to determine that income projected for the first eight months was $2,592,701. During the same time period, expenditures were budgeted to be $2,058,603. Actual expenditures were $2,887,396, resulting in a deficit of $294,695, with no evidence that controls have been put into place to guard against an increase in the deficit. Again, these figures assume that the revenues track budget projections to the dollar. These are not actual revenues. More importantly, there appears to be a total disregard for the budget set by the authority itself. At the first meeting (Nov. 9) I attended, the board was asked to approve expenditures in excess of $600,000. The amount budgeted for the same period was $239,936, resulting in $365,000 of excess spending.


I know of no prudent business owner who would find the budget deficit or the excess spending acceptable. The manner in which expenditures are presented to the board for approval requires significant modification. There is no total for the month and there is no budgetary comparison for the month or year to date. Former board member John Fry requested a change in the format during the board’s Jan. 12 meeting and, according to the minutes, David Hixson agreed to provide one.


As of Nov. 9, no change had been made, and the figures continue to be presented in a vacuum. I doubt whether any prudent business owner would accept the reports as presented, nor would the failure of a staff member to comply with a board member’s request be overlooked.


If the board of a public company conducted its affairs in this manner, a lawsuit would be brought against the board by its stockholders. In addition, the board’s directors and officers liability insurance would be null and void because the mismanagement would be seen to be intentional.


During our new board member orientation Oct. 26, my colleague Laura Douglas and I were urged by the chairman to ask questions and air our differences in private, rather than in a public forum. Speaking for myself, I found this to be unacceptable, given the very public nature of the project itself. Ted Darcus’s subsequent verbal attack on Ms. Douglas at the Nov. 9 meeting has made me more determined than ever to keep asking questions until I thoroughly understand the project and its management.


None of us truly knows whether this project is the best thing for Lancaster city or county, nor can we predict its success or failure with absolute certainty.


I would hope that my fellow board members understand that my need to have full understanding is in order that I may fill my fiduciary responsibility to the taxpayers of the city and county.




Penn Square Partners is a private partnership that consists of general partner Penn Square General Corp., a High Industries affiliate, Fulton Bank and Lancaster Newspapers, publisher of the Sunday News, Lancaster New Era and Intelligencer Journal.