State Sen. Gibson E. Armstrong has pledged $3 million in state funds to help finish construction of the downtown Lancaster convention center.
At a Lancaster County Convention Center Authority meeting Thursday night, it was reported that Armstrong recently told authority chairman Arthur Morris that the senator plans to fulfill the authority's request for the funds.
But Armstrong stipulated the money can be used only by the authority.
"If it is split with anyone, it won't be forthcoming," Armstrong said by phone Thursday night.
That means the money cannot be shared with Penn Square Partners, even though the authority has an agreement with the private developers that stipulates any state funds must be shared equally by the two entities.
The center is being built by the authority. The hotel is being built by Penn Square Partners on property owned by the Redevelopment Authority of the City of Lancaster.
Nevin Cooley, president of Penn Square General Corp., a partner in the hotel project, said he's aware of the funds Armstrong has promised the authority and the restrictions that would come with them.
"The convention center authority has asked us to waive that agreement" to share any state funds, Cooley said. "We understand their need, and we are working with them on it."
According to Morris, the authority realized about a year ago that it needed an additional $3 million as a contingency fund to meet unexpected costs that cropped up as construction was under way. The authority then asked Armstrong for that money.
Numerous change orders have added costs to the project, Morris said, and the $3 million no longer is considered a contingency fund.
"We've actually already spent about $1 million of that," he said.
The number and cost of the change orders are not unusual for a project of the convention center's size and complexity, Morris said.
Armstrong said he recently informed Morris that he could provide $3 million in state funding "from a variety of sources." The senator declined to elaborate and could not say when the $3 million would be given to the authority.
Armstrong stipulated the authority may not share the money with any other entity, including Penn Square Partners, because "the authority needs the money to finish construction and they have no other source of funds."
Penn Square Partners also needs about $2.8 million to meet increased construction costs associated with the building of the 18-level Penn Square Marriott hotel and restoration of the 1804 Montgomery House adjacent to the project site on South Queen Street.
"The Montgomery House wasn't originally part of Penn Square Partners' responsibilities," Cooley said.
With no state help coming to the partnership, Cooley said "we will have to meet as a private partnership and discuss what we are going to do" to bridge the funding gap.
The $170 million hotel/convention center project is being built along South Queen, East King and East Vine streets. The hotel is being built behind the preserved facade of the former Watt & Shand department store building at King and Queen streets.
Penn Square Partners consists of general partner Penn Square General Corp., a High Industries affiliate, and limited partner Penn Square Ltd., LLC, an affiliate of Lancaster Newspapers Inc., publisher of the Intelligencer Journal, Lancaster New Era and Sunday News.
E-mail: preilly@lnpnews.com