Center's finances still shaky
Center's finances still shaky BY BERNARD HARRIS, Staff Writer
Less than two weeks ago, Lancaster County Convention Center Authority officials formally agreed to a three-month extension of the refinancing of the center's bond debt.
Though the deadline was pushed back, the crisis has not yet passed.
And two different efforts are under way to address the financing problem.
Last week, the Redevelopment Authority of the City of Lancaster took the first tangible step to fund a "Plan B" devised by the Lancaster Alliance.
"Plan A" is the debt restructuring plan being negotiated with Wells Fargo bank by Lancaster County Commissioner Scott Martin.
The San Francisco-based bank is the sole holder of $64 million in convention center bonds. That money was used to build the 4-year-old center.
A year ago, a consultant sounded the alarm that interest rates on those bonds could jump from 5.57 percent to 8 percent when the debt was restructured, with the increased cost raising the threat of default and the possible closure of the center.
Martin said Monday that he remains in negotiation with the bank and he is hopeful a deal can be reached before the June 1 deadline. And, he said he is hopeful a second extension will not be needed.
Wells Fargo representatives have repeatedly declined to comment on the talks, citing client confidentiality.
Martin said his goal remains having the bank reduce its financing fee by 60 basis points. That would save the center authority $380,000 annually.
"No matter what the plan is, it's got to have that basis-point reduction," he said.
The goal of the Lancaster Alliance plan is also for a 60-basis-point reduction.
Martin said he was open to incorporating aspects of the Alliance plan into his negotiation efforts.
"I definitely haven't ruled it out. I think their numbers work, too, and that's good," the commissioner said.
Last week, the Redevelopment Authority, which owns the attached Lancaster Marriott at Penn Square hotel, voted to approve the use of half of the $200,000 annual rent it receives from hotel developers Penn Square Partners toward marketing the center.
The money is now used to pay city administration staff dedicated to redevelopment.
The marketing effort would be used solely to bringing more large events to the convention center. The cost of marketing the center is now shared between Interstate Hotels and Resorts, the contracted center manager and the county's tourism promotion agency, the Pennsylvania Dutch Convention & Visitors Bureau.
Randy Patterson, the city Economic Development & Neighborhood Revitalization department director, said the goal would be to raise the number of "Priority I & II" events from about five per year to 20.
Level I events are those in which 500 hotel rooms are rented in the county on a peak night, ensuring spillover beyond the 300-room Marriott. Level II events bring at least 300 hotel rooms booked on a peak night.
Lancaster Mayor Rick Gray said such events benefit the city and the county. Event attendees patronize shops, restaurants, gas stations and hotels without regard to municipal boundaries, he said.
"The convention center has brought an awful lot of business to the county and the city," he said.
The marketing funds would help build on the center's success in attracting events, said Gray, noting that bookings have exceeded initial projections.
This past weekend, the convention center floor was brimming with young gymnasts competing in the Red Rose Invitational tournament. On Monday, the balance beams and parallel bars were replaced with quilts as vendors began setting up displays for the American Quilters Society show.
The show, one of the center's largest annual events, is expected to bring 15,000 people downtown. It opens to the public Wednesday.
Those kinds of events, however, were never expected to fully fund the center. The county's 3.9 percent tax on hotel rooms was established to subsidize the center, which was expected to bring visitors that would benefit the county's overall tourism industry.
A shortfall in the tax revenue, which has been blamed on the recent recession, created the center's financing crisis.
Martin said Monday that hotel tax revenue has been on the upswing. He is hopeful that additional attractions, such as the soon-to-open Spooky Nook Sports complex in East Hempfield Township and a planned aquatics center on the eastern edge of Lancaster city, will help bring in even more hotel tax revenue.
"We're seeing more people come to the county and lay their heads in beds, and that's a good thing," Martin said.
Gray has proposed raising the county tax to 5 percent to shore up the center's finances. That move would add about $1 to the cost of a county hotel room, he said.
That increase has been rejected by the commissioners, whose approval is necessary to raise the tax. It is not part of Martin's plan for the center.
Any increase also has been opposed by the members of the Greater Lancaster Hotel & Motel Association, the trade group of local hotel operators and the visitors bureau board.
Almost a year ago, the Lancaster Alliance was joined by representatives of the Lancaster Chamber of Commerce & Industry, the Economic Development Company of Lancaster County and the James Street Improvement District in calling for a solution.
Lancaster Alliance President Bob Shoemaker, in an email message, said they have met with all the involved parties in an attempt to broker a workable plan.
"Our intention is to build on the work that's been done by a lot of folks to date, and the recently signed financing extension creates a window to work toward solving necessary details," Shoemaker wrote.
"The RACL decision this week illustrates the support and cooperation we're going to need to leverage this community asset (the Convention Center) to its fullest potential."
Gray maintained the Redevelopment Authority vote was a clear signal of the city's intent.
"Some people have been negotiating and making representations about what the city is ready to do. This is the city stating on the record what it intends to do," he said.
Penn Square Partners consists of Penn Square General Corp., an affiliate of the High Cos., and Penn Square Ltd. LLC, an affiliate of Lancaster Newspapers Inc., publisher of the Intelligencer Journal/Lancaster New Era and the Sunday News.
nCity and county officials are working on different plans to shore up county convention center.