I had a lengthy conversation with a local person who was invited on a Marriott Hotel and Convention Center walk through tour. This person called with tons of information knowing my personal opinion of the project. First of all, the layout is too choppy, too many small rooms.
That the convention center is not separate from the hotel brought this person to ponder whether, if the project is not fiscally sound, the perfect replacement would be a CASINO. Also, my friend reflected that in today’s market with the SMALL rooms for meetings, larger groups will not return or even consider.
Noted was the VINYL wall coverings, VERY CHEAP and going to need replaced sooner than normal upscale wall covering. The CARPET is definitely LOW grade, the type that is used in a lot of COMMERCIAL jobs. The design is outdated in comparison to current national projects of this nature. The exterior is totally compromised in this person’s opinion.
Another interesting tidbit was that the claim that the complex has over 200 events booked to date. I suggested attending a monthly meeting or meeting with Laura Douglas or R. B. Campbell to obtain the TRUE facts of business booked.
Also, I corrected my friend’s misunderstanding that Penn Square Partners (Dale High and Lancaster Newspapers) own the hotel. I pointed out that the Redevelopment Authority of Lancaster (City) owns the Hotel and the Convention Center Authority owns the CC. The project is a condominium with Penn Square Partners likely in the distant future to own the hotel, if and when the their investment would not longer be at risk.
Also in their presentations they are consistently made told about tax revenue to come out of this. In fact, the hotel as well as the CC is exempt from real estate taxes and sales tax revenues generated are being indirectly returned to the project through an arrangement with the state. I did my best to listen and reply.
WHAT A JOKE.
Published by: artie.see(at)gmail.com
Tuesday, June 30, 2009
A Cloudy Forecast
June 18, 2009 was a cloudy and dismal day in downtown Lancaster, PA. Perhaps this was appropriate for the long-delayed ribbon-cutting ceremony held the day before the official opening of the taxpayer-financed hotel and convention center project. Even more appropriate was the location of the ceremony, held indoors where it was shielded from the light of day, inside the tax-exempt hotel which was used so often by the private "partners" to squeeze more and more concessions from taxpayers.
When the construction bonds for the convention center were sold at the end of March in 2007, the opening date was announced to be on March 1, 2009. Repeated unexplained construction delays resulted in an opening that was one hundred and ten days late.
At the same time, it was announced that the "final" cost of the project would be $177.6 million; no explanation was given as to where the additional funds would come from. Invoices from contractors and vendors are likely to still be submitted for quite a few weeks, so it is possible that the final cost will be even higher.
There is no doubt that the hotel and convention center project will generate a fair amount of economic development in downtown Lancaster. But at what cost?
Over $140 million taxpayer dollars - plus interest - is a LOT of money to create two to three hundred low-paying service jobs, especially considering that the cost to keep the convention center open - including lost real estate tax revenue - will amount to several million dollars every year, basically forever. This amounts on a negative return on investment, no matter how the facts are spun.
To add insult to injury, as of June 18, 2009 the convention center has only booked a little more than half of the total revenue which was expected for the 2009-2010 fiscal year. At this late date, it is highly unlikely that any more major events will be booked before the current fiscal year ends on March 31, 2010.
Particularly weak has been the market for "other" events: competitions, galas/ceremonies, entertainment, and meetings/conferences. As of June 18, 2009 only 29.1% of expected business had been booked for the current fiscal year. This is most likely because the vast majority of smaller events are being booked in the hotel's space by the joint manager of both the hotel and convention center. A certain amount of this may be attributed to groups booking hotel rooms that are given the use of meeting space for free, thereby avoiding the convention center's booking fees.
Looking beyond March of 2010, things look even worse. "Other" events booked are above expectation, only because of one large "competition". But the real money makers are "tradeshows", which are booked from 12 to 36 months in advance; only a single one-day event has been contracted for the next fiscal year, and into the future.
(These facts and figures were taken from Interstate Hotels and Resorts' presentation to the Lancaster County Convention Center Authority's Public Relations, Marketing, and Hospitality Committee on June 18, 2009, which can be downloaded at this link: http://www.lccca.com/Marketing%20Committee%20Presentation%206.18.09%20FINAL.pdf)
Further clouding the future of the convention center is the announced resignation of LCCCA board chairman Art Morris at the end of July 2009. Former Lancaster mayor Art Morris brought an accountability to the project which was lacking throughout its previous history. As acting executive director of the project in 2007 (a position which he had volunteered for), Art Morris - working closely with fellow board members R.B. Campbell and Laura Douglas - uncovered millions of dollars in deficiencies inside the construction budget which was created by his predecessors. Mr. Morris was able to prevail upon former State Sen. Gib Armstrong to come up with yet another three million State taxpayer dollars in an attempt to make ends meet.
Art Morris leaves the hotel and convention center project at a critical time: not all of the construction bills are in yet, and no one knows exactly how much money the convention center will lose now it is operation. Whoever replaces Art Morris as LCCCA chairman will likely soon find themselves begging the County Commissioners to increase the "hotel tax", in order to keep the convention center open for business.
The downtown Lancaster, PA taxpayer-financed hotel and convention center project has been controversial ever since it was first proposed in mid-1999, ten years ago. In spite of heavy "spin" by project supporters and the local mainstream media, this project will remain controversial for the remainder of its existence.
When the construction bonds for the convention center were sold at the end of March in 2007, the opening date was announced to be on March 1, 2009. Repeated unexplained construction delays resulted in an opening that was one hundred and ten days late.
At the same time, it was announced that the "final" cost of the project would be $177.6 million; no explanation was given as to where the additional funds would come from. Invoices from contractors and vendors are likely to still be submitted for quite a few weeks, so it is possible that the final cost will be even higher.
# # #
There is no doubt that the hotel and convention center project will generate a fair amount of economic development in downtown Lancaster. But at what cost?
Over $140 million taxpayer dollars - plus interest - is a LOT of money to create two to three hundred low-paying service jobs, especially considering that the cost to keep the convention center open - including lost real estate tax revenue - will amount to several million dollars every year, basically forever. This amounts on a negative return on investment, no matter how the facts are spun.
To add insult to injury, as of June 18, 2009 the convention center has only booked a little more than half of the total revenue which was expected for the 2009-2010 fiscal year. At this late date, it is highly unlikely that any more major events will be booked before the current fiscal year ends on March 31, 2010.
Particularly weak has been the market for "other" events: competitions, galas/ceremonies, entertainment, and meetings/conferences. As of June 18, 2009 only 29.1% of expected business had been booked for the current fiscal year. This is most likely because the vast majority of smaller events are being booked in the hotel's space by the joint manager of both the hotel and convention center. A certain amount of this may be attributed to groups booking hotel rooms that are given the use of meeting space for free, thereby avoiding the convention center's booking fees.
Looking beyond March of 2010, things look even worse. "Other" events booked are above expectation, only because of one large "competition". But the real money makers are "tradeshows", which are booked from 12 to 36 months in advance; only a single one-day event has been contracted for the next fiscal year, and into the future.
(These facts and figures were taken from Interstate Hotels and Resorts' presentation to the Lancaster County Convention Center Authority's Public Relations, Marketing, and Hospitality Committee on June 18, 2009, which can be downloaded at this link: http://www.lccca.com/Marketing%20Committee%20Presentation%206.18.09%20FINAL.pdf)
# # #
Further clouding the future of the convention center is the announced resignation of LCCCA board chairman Art Morris at the end of July 2009. Former Lancaster mayor Art Morris brought an accountability to the project which was lacking throughout its previous history. As acting executive director of the project in 2007 (a position which he had volunteered for), Art Morris - working closely with fellow board members R.B. Campbell and Laura Douglas - uncovered millions of dollars in deficiencies inside the construction budget which was created by his predecessors. Mr. Morris was able to prevail upon former State Sen. Gib Armstrong to come up with yet another three million State taxpayer dollars in an attempt to make ends meet.
Art Morris leaves the hotel and convention center project at a critical time: not all of the construction bills are in yet, and no one knows exactly how much money the convention center will lose now it is operation. Whoever replaces Art Morris as LCCCA chairman will likely soon find themselves begging the County Commissioners to increase the "hotel tax", in order to keep the convention center open for business.
# # #
The downtown Lancaster, PA taxpayer-financed hotel and convention center project has been controversial ever since it was first proposed in mid-1999, ten years ago. In spite of heavy "spin" by project supporters and the local mainstream media, this project will remain controversial for the remainder of its existence.
Sunday, May 31, 2009
Bait and switch
We've all seen far too many instances of "bait and switch", where we are enticed to look for something that is advertised, only to find that what is actually being offered is quite different. Unfortunately, the hotel and convention center project in downtown Lancaster, PA has been a prime example of "bait and switch" tactics.
For many months now, we've been hearing from many different sources about how this project would provide many good jobs for Lancaster residents. With cooperation from a number of different agencies, "Career Link" set up a training program for more than 800 people, with the promise that anyone who completes the course would be guaranteed an interview for a job in the hotel and convention center. Widely advertised job fairs attracted about 1800 applicants. Yet out of the 150 or so front-line employees that have been made job offers so far, only 80 were hired from these two groups (according to Mark Moosic of Interstate Hotels and Resorts, joint manager of both the hotel and convention center). Where did the rest come from? Out of well over 2000 applicants who responded to a variety of advertisements, including on web sites like craigslist.org. (Interestingly, not one "help wanted" advertisement for the hotel and convention center has appeared in any of the local newspapers.)
The "good" news is that out of the 150 individuals offered jobs so far, 90% will be full-time positions; 72% of these are Lancaster City residents. Additional people are expected to be hired by the end of 2009, bringing hotel and convention center staffing to about 250; 80% of this total should be full-time.
Another example of "bait and switch" is the total cost of the project. When the project was first proposed, it was expected to cost $75 million; the total cost now is estimated to be $177.6 million, not counting certain interest charges, and threatens to go even higher. The original cost to Lancaster taxpayers was estimated to be $15 million; now it is nearly $64 million, not counting lost real estate tax revenue. (It is worth noting that this project was originally supposed to create 300 to 400 jobs, many more than the 250 or so expected to result from a far more expensive facility.)
Lancaster City and School District of Lancaster taxpayers have been especially hard hit by yet another "bait and switch": the Intelligencer Journal of August 21, 2001 quoted Nevin Cooley of High as promising the board of the School District of Lancaster that the hotel would generate as much as $400,000 a year in school real estate taxes; additional tax revenue would go to Lancaster City. The current project will pay no real estate taxes whatsoever for at least 20 years. Meanwhile, Lancaster City has forgiven the project hundreds of thousands of dollars in fees, while spending millions of dollars on improving the appearance of the area around the convention center in anticipation of its opening.
Much has been made of the "private-public partnership" behind this project. But how much of a "partnership" is it? For example, the LCCCA is using taxpayer dollars to pay for 100% of the cost of constructing and maintaining both ballrooms, as well as the main kitchen. One of these ballrooms will be controlled by the Penn Square Partners, which will receive all revenue generated from that space. And the hotel is expected to use the kitchen at least 75% of the time. For this and other considerations, the PSP will pay $100 a year, with a 99 year lease. Now that is some partnership.
How are we supposed to react to all of this? Judging by statements made by numerous public officials and civic leaders, as well as articles and editorials in the local newspapers, we are supposed to be very happy about the hotel and convention center project! It is what it is, we have been told; we must not focus on the past, but instead look forward to the future. We are supposed to focus on the jobs and economic development that might be created by the hotel and convention center project, and just forget about the "bait and switch" agreements which will be so costly to local taxpayers for generations to come.
For many months now, we've been hearing from many different sources about how this project would provide many good jobs for Lancaster residents. With cooperation from a number of different agencies, "Career Link" set up a training program for more than 800 people, with the promise that anyone who completes the course would be guaranteed an interview for a job in the hotel and convention center. Widely advertised job fairs attracted about 1800 applicants. Yet out of the 150 or so front-line employees that have been made job offers so far, only 80 were hired from these two groups (according to Mark Moosic of Interstate Hotels and Resorts, joint manager of both the hotel and convention center). Where did the rest come from? Out of well over 2000 applicants who responded to a variety of advertisements, including on web sites like craigslist.org. (Interestingly, not one "help wanted" advertisement for the hotel and convention center has appeared in any of the local newspapers.)
The "good" news is that out of the 150 individuals offered jobs so far, 90% will be full-time positions; 72% of these are Lancaster City residents. Additional people are expected to be hired by the end of 2009, bringing hotel and convention center staffing to about 250; 80% of this total should be full-time.
Another example of "bait and switch" is the total cost of the project. When the project was first proposed, it was expected to cost $75 million; the total cost now is estimated to be $177.6 million, not counting certain interest charges, and threatens to go even higher. The original cost to Lancaster taxpayers was estimated to be $15 million; now it is nearly $64 million, not counting lost real estate tax revenue. (It is worth noting that this project was originally supposed to create 300 to 400 jobs, many more than the 250 or so expected to result from a far more expensive facility.)
Lancaster City and School District of Lancaster taxpayers have been especially hard hit by yet another "bait and switch": the Intelligencer Journal of August 21, 2001 quoted Nevin Cooley of High as promising the board of the School District of Lancaster that the hotel would generate as much as $400,000 a year in school real estate taxes; additional tax revenue would go to Lancaster City. The current project will pay no real estate taxes whatsoever for at least 20 years. Meanwhile, Lancaster City has forgiven the project hundreds of thousands of dollars in fees, while spending millions of dollars on improving the appearance of the area around the convention center in anticipation of its opening.
Much has been made of the "private-public partnership" behind this project. But how much of a "partnership" is it? For example, the LCCCA is using taxpayer dollars to pay for 100% of the cost of constructing and maintaining both ballrooms, as well as the main kitchen. One of these ballrooms will be controlled by the Penn Square Partners, which will receive all revenue generated from that space. And the hotel is expected to use the kitchen at least 75% of the time. For this and other considerations, the PSP will pay $100 a year, with a 99 year lease. Now that is some partnership.
How are we supposed to react to all of this? Judging by statements made by numerous public officials and civic leaders, as well as articles and editorials in the local newspapers, we are supposed to be very happy about the hotel and convention center project! It is what it is, we have been told; we must not focus on the past, but instead look forward to the future. We are supposed to focus on the jobs and economic development that might be created by the hotel and convention center project, and just forget about the "bait and switch" agreements which will be so costly to local taxpayers for generations to come.
Sunday, May 24, 2009
Disenfranchised
For the past decade, Lancaster has seen more dramatic changes than at any time since the disastrous "Urban Renewal" projects of the 1960s and 1970s. Like "Urban Renewal", these changes will have a lasting impact on Lancaster for decades to come. Also like "Urban Renewal", these projects were implemented without any meaningful input from the taxpayers and voters whose money is being spent to create these changes.
An example of this kind of project is the "streetscape improvement" program which is currently under way in downtown Lancaster. Several years ago, Lancaster City borrowed well over $100 million to finance Federally-mandated improvements to its water treatment system. Without public debate, this bond sale included millions of additional dollars for unrelated projects. For example, desperately needed fire trucks have been purchased, to replace old equipment that had become expensive to maintain. Several million dollars have been put aside to repair or replace the more than a century old City Hall, which fails to meet many building codes. These projects were described in general terms to City Council, which approved the bond sale without knowing the details of the city administration's plans.
There can be no doubt that our public safety depends on police and fire personnel having equipment that works reliably when needed. City employees (like all of us) function best when working conditions are safe and adequate. And it is the responsibility of City officials to make certain our City government serves the needs of its residents as cost-effectively as possible.
But "streetscape improvements" are not a requirement of local government. Sidewalks are normally the responsibility of the property owner; local government only has the responsibility to set safety and maintenance standards, and to make certain that those standards are maintained. In the only public review of this project, an outline of the "streetscape improvement district" along with a few conceptual drawings was presented to City Council, which easily approved the proposal. But once construction began, the shortcomings of the "streetscape improvements" quickly became painfully apparent: most downtown intersections are receiving "bulb-outs" that restrict the movement of traffic, something that was barely mentioned in the brief presentation to City Council. These "traffic calming" devices (a favorite of the current administration) are designed to make crossing the street easier for pedestrians, but existing downtown traffic congestion has already been made much worse as a result.
Should local government officials be permitted to make such radical changes to the appearance and traffic flow of downtown Lancaster without public involvement? After all, it is the residents of Lancaster City whose tax dollars are being used to make these changes. Don't the people have any say at all about how their hard-earned money is being spent for a non-essential project that significantly impacts their lives?
Another project where the public has been kept at a distance is the proposed streetcar system in downtown Lancaster. When questions about its operational funding became a significant stumbling block, a "private" non-profit corporation (made up primarily of government officials and civic leaders) was formed to take ownership of the project. With no involvement by City Council, three antique trolley cars were purchased; one was repainted, and in October of 2008 was parked on City-owned property at a major downtown intersection for all to see (as of this writing, it is still there). Public officials claim that this display is intended to stimulate public discussion of a streetcar system in Lancaster City, but in the well over three year history of this proposal there has not yet been one single public meeting announced where anyone could raise issues or concerns. The streetcar project would need to be built using taxpayer dollars, on public streets, and its operation would ultimately be guaranteed by Lancaster City residents.
Then there is the taxpayer-financed hotel and convention center project, where serious questions raised by Lancaster residents were met with ridicule and attacks from the public officials and private interests that support the project.
There has clearly been a pattern of restricting public input about potentially controversial taxpayer-funded projects in Lancaster. Significant but unnecessary projects costing huge sums of taxpayer dollars have been constructed without any meaningful input from the people who must pay the bills, and will forever live with the consequences. The political leaders of Lancaster have demonstrated time and again that they believe their pet projects are more important than the people who they were elected or appointed to represent.
An example of this kind of project is the "streetscape improvement" program which is currently under way in downtown Lancaster. Several years ago, Lancaster City borrowed well over $100 million to finance Federally-mandated improvements to its water treatment system. Without public debate, this bond sale included millions of additional dollars for unrelated projects. For example, desperately needed fire trucks have been purchased, to replace old equipment that had become expensive to maintain. Several million dollars have been put aside to repair or replace the more than a century old City Hall, which fails to meet many building codes. These projects were described in general terms to City Council, which approved the bond sale without knowing the details of the city administration's plans.
There can be no doubt that our public safety depends on police and fire personnel having equipment that works reliably when needed. City employees (like all of us) function best when working conditions are safe and adequate. And it is the responsibility of City officials to make certain our City government serves the needs of its residents as cost-effectively as possible.
But "streetscape improvements" are not a requirement of local government. Sidewalks are normally the responsibility of the property owner; local government only has the responsibility to set safety and maintenance standards, and to make certain that those standards are maintained. In the only public review of this project, an outline of the "streetscape improvement district" along with a few conceptual drawings was presented to City Council, which easily approved the proposal. But once construction began, the shortcomings of the "streetscape improvements" quickly became painfully apparent: most downtown intersections are receiving "bulb-outs" that restrict the movement of traffic, something that was barely mentioned in the brief presentation to City Council. These "traffic calming" devices (a favorite of the current administration) are designed to make crossing the street easier for pedestrians, but existing downtown traffic congestion has already been made much worse as a result.
Should local government officials be permitted to make such radical changes to the appearance and traffic flow of downtown Lancaster without public involvement? After all, it is the residents of Lancaster City whose tax dollars are being used to make these changes. Don't the people have any say at all about how their hard-earned money is being spent for a non-essential project that significantly impacts their lives?
Another project where the public has been kept at a distance is the proposed streetcar system in downtown Lancaster. When questions about its operational funding became a significant stumbling block, a "private" non-profit corporation (made up primarily of government officials and civic leaders) was formed to take ownership of the project. With no involvement by City Council, three antique trolley cars were purchased; one was repainted, and in October of 2008 was parked on City-owned property at a major downtown intersection for all to see (as of this writing, it is still there). Public officials claim that this display is intended to stimulate public discussion of a streetcar system in Lancaster City, but in the well over three year history of this proposal there has not yet been one single public meeting announced where anyone could raise issues or concerns. The streetcar project would need to be built using taxpayer dollars, on public streets, and its operation would ultimately be guaranteed by Lancaster City residents.
Then there is the taxpayer-financed hotel and convention center project, where serious questions raised by Lancaster residents were met with ridicule and attacks from the public officials and private interests that support the project.
There has clearly been a pattern of restricting public input about potentially controversial taxpayer-funded projects in Lancaster. Significant but unnecessary projects costing huge sums of taxpayer dollars have been constructed without any meaningful input from the people who must pay the bills, and will forever live with the consequences. The political leaders of Lancaster have demonstrated time and again that they believe their pet projects are more important than the people who they were elected or appointed to represent.
Monday, May 18, 2009
Success?
We have been told many times that the hotel and convention center project currently under construction in Lancaster, PA will help to revitalize its downtown area. The $139.4 million (plus interest) taxpayer dollars spent on this project (so far) has been called an investment in the future of Lancaster.
We have heard many vague promises about how successful the project will be. What we have NOT heard are many specifics about what form this success will take.
For the sake of this article, let's assume that the hotel and convention center meets the expectations of those who helped to create the project. What changes can we expect to see in downtown Lancaster as a result of a successful hotel and convention center?
The biggest advantage of a hotel and convention center is the number of people that it is expected to attract to the downtown area. It is hoped that the guests of the facility will take the time to visit surrounding shops and restaurants, spending money that will help to financially revitalize downtown Lancaster.
The most optimistic scenarios provided to the public indicate that the convention center will be utilized at most an average of two days a week. There has been no information whatsoever released to the public about the expectations of the hotel; it is considered to be privileged business information, in spite of about $40 million (plus interest) of taxpayer dollars invested in the $76 million hotel. Practically all events to be held in the hotel will include food, which greatly reduces the economic impact those guests will have in the surrounding downtown area. And some of the events to be held in the convention center spaces will also include meals and/or food service.
During any given event, anywhere from a few dozen to a few thousand people may visit downtown Lancaster. Much of their time will be spent within the facility, attending meetings and exhibitions. It is hoped that visitors to the hotel and convention center will spend at least some of their time shopping and dining in the area.
What might visitors spend their money on when visiting downtown Lancaster?
Guests from out of town might be attracted to shops and stands that specifically sell local merchandise. There are a few of these in the Central Market, and on West King Street near Penn Square. Other shops in the area sell high-end and specialty merchandise that might appeal to visitors with money to spend. The new business created by an influx of visitors might justify the opening of even more shops near the hotel and convention center; there are certainly more than enough vacancies within a block or two of Penn Square, especially on East King Street.
The catch for shopkeepers is that the business created by convention center visitors can never be consistent. Some days, thousands of visitors will be in downtown Lancaster; on most other days, no more than a handful of guests will be present. Whatever new businesses might open in downtown Lancaster must be able to sustain their cash flow during the majority of the time when the convention center is dark.
The same is true of restaurants. Some dining establishments in downtown Lancaster have already announced the hiring of more employees. Unfortunately, most of these jobs will be part-time out of necessity, depending upon the number of people who are interested in dining out at any given time. There may or may not be enough businesses created by the hotel and convention center to justify more restaurants in downtown Lancaster, but once again their business model must be sustainable all year.
In July of 2001, former State Sen. Gib Armstrong promised that the then $75 million project would create 300 to 400 new jobs. Sen. Armstrong did not specify whether or not all of these jobs would be inside the hotel and convention center. Interstate Hotels and Resorts, the joint manager of both the hotel and convention center, promised in early April of 2009 to hire a total of 225 to 250 people by the end of the year; about 80 percent of these are expected to be full time. Considering the intermittent nature of business downtown that could be created as a result of the hotel and convention center project, Sen. Armstrong's estimates may indeed be accurate - if they include jobs created outside the walls of the facility.
What impact might the hotel and convention center have on local taxes?
As properties are improved and redeveloped as a result of increased traffic created by the project, there will be some increased real estate tax revenue. But since this business will be somewhat sporadic, whatever additional taxes are collected will be minimal, especially since there is no land available for new construction. This increased tax revenue has already been more than offset by the fact that the hotel will pay no real estate taxes whatsoever for at least 20 years, and the convention center will never pay any real estate taxes ever again.
There will be tax revenue from the local income and EMS taxes collected as a result of the new jobs created as a result of the project. Unfortunately, since most of these new jobs will pay little more than minimum wage, what wage taxes might be collected will clearly be less than the real estate taxes that would have been collected from the site if it were in the same condition that it was when the project was first proposed. In addition, the Penn Square Partners has promised to provide an annual $200,000 payment in lieu of taxes to Lancaster City, depending on how profitable the hotel becomes. Unfortunately, this is only enough money to pay for two and a fraction full-time police officers, far fewer than will be required to provide the traffic and other public safety services that are required by a hotel and convention center of this size. Meanwhile, the School District of Lancaster will receive nothing at all, placing an additional burden on local taxpayers. And none of this covers the millions of taxpayer dollars being spent on "streetscape improvements" that would not have been made without the hotel and convention center.
Taking all of this into consideration: how can the potential for "success" of the hotel and convention center be defined?
We have heard many vague promises about how successful the project will be. What we have NOT heard are many specifics about what form this success will take.
For the sake of this article, let's assume that the hotel and convention center meets the expectations of those who helped to create the project. What changes can we expect to see in downtown Lancaster as a result of a successful hotel and convention center?
The biggest advantage of a hotel and convention center is the number of people that it is expected to attract to the downtown area. It is hoped that the guests of the facility will take the time to visit surrounding shops and restaurants, spending money that will help to financially revitalize downtown Lancaster.
The most optimistic scenarios provided to the public indicate that the convention center will be utilized at most an average of two days a week. There has been no information whatsoever released to the public about the expectations of the hotel; it is considered to be privileged business information, in spite of about $40 million (plus interest) of taxpayer dollars invested in the $76 million hotel. Practically all events to be held in the hotel will include food, which greatly reduces the economic impact those guests will have in the surrounding downtown area. And some of the events to be held in the convention center spaces will also include meals and/or food service.
During any given event, anywhere from a few dozen to a few thousand people may visit downtown Lancaster. Much of their time will be spent within the facility, attending meetings and exhibitions. It is hoped that visitors to the hotel and convention center will spend at least some of their time shopping and dining in the area.
What might visitors spend their money on when visiting downtown Lancaster?
Guests from out of town might be attracted to shops and stands that specifically sell local merchandise. There are a few of these in the Central Market, and on West King Street near Penn Square. Other shops in the area sell high-end and specialty merchandise that might appeal to visitors with money to spend. The new business created by an influx of visitors might justify the opening of even more shops near the hotel and convention center; there are certainly more than enough vacancies within a block or two of Penn Square, especially on East King Street.
The catch for shopkeepers is that the business created by convention center visitors can never be consistent. Some days, thousands of visitors will be in downtown Lancaster; on most other days, no more than a handful of guests will be present. Whatever new businesses might open in downtown Lancaster must be able to sustain their cash flow during the majority of the time when the convention center is dark.
The same is true of restaurants. Some dining establishments in downtown Lancaster have already announced the hiring of more employees. Unfortunately, most of these jobs will be part-time out of necessity, depending upon the number of people who are interested in dining out at any given time. There may or may not be enough businesses created by the hotel and convention center to justify more restaurants in downtown Lancaster, but once again their business model must be sustainable all year.
In July of 2001, former State Sen. Gib Armstrong promised that the then $75 million project would create 300 to 400 new jobs. Sen. Armstrong did not specify whether or not all of these jobs would be inside the hotel and convention center. Interstate Hotels and Resorts, the joint manager of both the hotel and convention center, promised in early April of 2009 to hire a total of 225 to 250 people by the end of the year; about 80 percent of these are expected to be full time. Considering the intermittent nature of business downtown that could be created as a result of the hotel and convention center project, Sen. Armstrong's estimates may indeed be accurate - if they include jobs created outside the walls of the facility.
What impact might the hotel and convention center have on local taxes?
As properties are improved and redeveloped as a result of increased traffic created by the project, there will be some increased real estate tax revenue. But since this business will be somewhat sporadic, whatever additional taxes are collected will be minimal, especially since there is no land available for new construction. This increased tax revenue has already been more than offset by the fact that the hotel will pay no real estate taxes whatsoever for at least 20 years, and the convention center will never pay any real estate taxes ever again.
There will be tax revenue from the local income and EMS taxes collected as a result of the new jobs created as a result of the project. Unfortunately, since most of these new jobs will pay little more than minimum wage, what wage taxes might be collected will clearly be less than the real estate taxes that would have been collected from the site if it were in the same condition that it was when the project was first proposed. In addition, the Penn Square Partners has promised to provide an annual $200,000 payment in lieu of taxes to Lancaster City, depending on how profitable the hotel becomes. Unfortunately, this is only enough money to pay for two and a fraction full-time police officers, far fewer than will be required to provide the traffic and other public safety services that are required by a hotel and convention center of this size. Meanwhile, the School District of Lancaster will receive nothing at all, placing an additional burden on local taxpayers. And none of this covers the millions of taxpayer dollars being spent on "streetscape improvements" that would not have been made without the hotel and convention center.
Taking all of this into consideration: how can the potential for "success" of the hotel and convention center be defined?
Monday, May 11, 2009
Consequences
When the agreements which govern the hotel and convention center project were drawn up, the powers of the LCCCA were severely limited. This means that the LCCCA has been essentially powerless in the design and construction of the integrated facility; the "private partner" which controls the ownership of the hotel business is also the master developer, general trades contractor, and precast concrete contractor for the entire project. This same "private partner" chose the project construction manager, as well as the joint manager of both the hotel and convention center.
The LCCCA has had no control whatsoever over the construction of the building, and had no input over the construction schedule. All of the work performed since the contracts were awarded and the construction bonds were sold has been under the oversight of the "private partner" which orchestrated so much of the project. Perhaps individual contractors may have fallen behind schedule, however overall progress on the project is clearly the responsibility of the project's master developer and their hand-picked construction manager. Compounding the frustration are the numerous reports over many months from the project's master developer and construction manager to the LCCCA board that promised the project would meet its construction deadlines. Only when the last two delays in opening the project were announced in the local media were most members of the LCCCA board made aware that something was seriously wrong.
These agreements which bind the LCCCA to its "private partners" were negotiated and written for the benefit of taxpayers by a well-known law firm, which was paid handsomely with taxpayer dollars for their efforts. The former leadership of the LCCCA has been clearly negligent in not providing adequate oversight and accountability for the content of these agreements. This serious omission was compounded by board members who refused to read the legal documents they were voting for, while claiming they didn't need to because they trusted the law firm that drew up these agreements.
The entire hotel and convention center project has been orchestrated by the project's "private partner", which made certain that the LCCCA would be impotent. This "private partner" must bear the ultimate responsibility for the project's delayed opening.
Once again, the agreements which limit the powers of the LCCCA while placing such an unfair burden on taxpayers have proven to be the project's Achilles' heel. This will not be the last time that these agreements will screw the taxpayers.
The LCCCA has had no control whatsoever over the construction of the building, and had no input over the construction schedule. All of the work performed since the contracts were awarded and the construction bonds were sold has been under the oversight of the "private partner" which orchestrated so much of the project. Perhaps individual contractors may have fallen behind schedule, however overall progress on the project is clearly the responsibility of the project's master developer and their hand-picked construction manager. Compounding the frustration are the numerous reports over many months from the project's master developer and construction manager to the LCCCA board that promised the project would meet its construction deadlines. Only when the last two delays in opening the project were announced in the local media were most members of the LCCCA board made aware that something was seriously wrong.
These agreements which bind the LCCCA to its "private partners" were negotiated and written for the benefit of taxpayers by a well-known law firm, which was paid handsomely with taxpayer dollars for their efforts. The former leadership of the LCCCA has been clearly negligent in not providing adequate oversight and accountability for the content of these agreements. This serious omission was compounded by board members who refused to read the legal documents they were voting for, while claiming they didn't need to because they trusted the law firm that drew up these agreements.
The entire hotel and convention center project has been orchestrated by the project's "private partner", which made certain that the LCCCA would be impotent. This "private partner" must bear the ultimate responsibility for the project's delayed opening.
Once again, the agreements which limit the powers of the LCCCA while placing such an unfair burden on taxpayers have proven to be the project's Achilles' heel. This will not be the last time that these agreements will screw the taxpayers.
Sunday, May 03, 2009
Delay
Some things simply do not make sense. A good example is the announcement of yet another delay in the completion of the hotel and convention center project in downtown Lancaster, PA.
When the project's construction bonds were sold at the end of March in 2007, which allowed construction to proceed, it was announced that the hotel and convention center would open for business in March of 2009. Every month, the master developer and the construction manager of the project reported to the LCCCA board that construction was proceeding well. The construction manager did report on "slippage" from the original plan, but the LCCCA board was repeatedly promised that there was enough time allotted in the schedule to meet the promised opening date.
Not until late November of 2008 was a firm opening date set, which was April 21, 2009. A number of events which had already been booked for before that date had to be moved. As late as the fourth week of March 2009, the LCCCA board was repeatedly promised that the April 21 opening date would be met.
The day before the scheduled March 2009 LCCCA board meeting, an article in a local newspaper mentioned in passing that the project would be delayed once again; the new opening date was promised to be during the week of May 11, 2009. Unfortunately, most LCCCA board members learned about this in the news. During the board meeting held on March 26th, its members were assured that this new deadline could easily be met.
At an LCCCA Facilities Programming Committee meeting held two weeks later, the project's construction manager mentioned that construction was tracking about another week behind. LCCCA board members were assured that this time should be able to be made up by working extra hours.
At the LCCCA Finance Committee meeting on April 27, 2009, board members were assured by the executive director that the facility should be able to open by May 15th. Yet two days later, it was announced in the local media that the facility's opening would be delayed once more; this time, no opening date was promised. Once again, most LCCCA board members learned about the latest delay from the local media.
The April 30th LCCCA meeting revealed just how angry its board members really are. When questioned about the latest delay, the master developer's representative initially declined to answer any questions. Only when irate board members made it clear that they expected some kind of accountability did the representatives of the project's master developer and construction manager respond, but then only with evasive and distracting answers. The majority of the LCCCA board made it clear that they want to know why this latest delay was not anticipated a few weeks earlier, and demanded that a report be presented during a special meeting to be held the following week.
Why was this delay in opening the hotel and convention center not anticipated?
The agreements which were sealed at the time of the March 2007 bond sale took all control of the project out of the hands of the Lancaster County Convention Center Authority. From that time on, the authority is limited to a caretaker role, with no power to make changes to the project or its schedule. The LCCCA cannot schedule events in its own convention center, nor can it even pick out the furnishings, floor coverings, or color of the wall! All of these are reserved for Interstate Hotels and Resorts, by agreements made years ago. It was even a struggle for the LCCCA to get the right to select artwork which is to be displayed inside its own building.
Apparently the LCCCA never even had the right to agree to their own project's construction schedule. When former LCCCA chairman Ted Darcus was asked at an April 2009 committee meeting if the board had agreed to the construction schedule during his tenure, he said that it did not. In any event, it is clear that the LCCCA cannot be responsible for any delays which occurred after the project was turned over to the master developer and construction manager after the March 2007 bond sale.
The LCCCA was consistently promised by the project's master developer and construction manager that the project would open on schedule. Why would they have made these promises, if they knew the schedule could not be met? The construction manager has been involved in hundreds of projects worth billions of dollars. The master developer has had even more real-world experience. Why would these seasoned professionals have not anticipated these supposedly last-minute delays?
The first delay was announced in November of 2008. By then, all of the issues and potential pitfalls should have been clearly identified. Unplanned rock removal and ground-water issues were already known when the March 2009 opening date was announced immediately after the construction bond sale in March 2007. The complexity of the project - including most unanticipated construction issues - should have been spelled out by the November 2008 announcement, when the project was already 70% complete; after all, the structure had been completely enclosed weeks earlier. The claims by the master developer and construction manager that the complexity of the project could not have been anticipated before the end of April 2009 do not ring true.
All of this is complicated by the fact that the master developer is the same company which is the general partner in the operation of the hotel, the general trades contractor for the entire project, and the precast concrete contractor for the entire project. These last-minute "unanticipated" delays have made the entire project, and every company associated with it, look very bad indeed. It would have been much better for all involved to have scheduled a June 2009 opening date in late 2008, rather than springing such an unpleasant surprise on the many people who had made plans for earlier events.
The claims made by the master developer and construction manager of the hotel and convention center that the complexity of the project led to these unexpected delays simply do not make sense. But then again, what else about this project does make any kind of sense?
When the project's construction bonds were sold at the end of March in 2007, which allowed construction to proceed, it was announced that the hotel and convention center would open for business in March of 2009. Every month, the master developer and the construction manager of the project reported to the LCCCA board that construction was proceeding well. The construction manager did report on "slippage" from the original plan, but the LCCCA board was repeatedly promised that there was enough time allotted in the schedule to meet the promised opening date.
Not until late November of 2008 was a firm opening date set, which was April 21, 2009. A number of events which had already been booked for before that date had to be moved. As late as the fourth week of March 2009, the LCCCA board was repeatedly promised that the April 21 opening date would be met.
The day before the scheduled March 2009 LCCCA board meeting, an article in a local newspaper mentioned in passing that the project would be delayed once again; the new opening date was promised to be during the week of May 11, 2009. Unfortunately, most LCCCA board members learned about this in the news. During the board meeting held on March 26th, its members were assured that this new deadline could easily be met.
At an LCCCA Facilities Programming Committee meeting held two weeks later, the project's construction manager mentioned that construction was tracking about another week behind. LCCCA board members were assured that this time should be able to be made up by working extra hours.
At the LCCCA Finance Committee meeting on April 27, 2009, board members were assured by the executive director that the facility should be able to open by May 15th. Yet two days later, it was announced in the local media that the facility's opening would be delayed once more; this time, no opening date was promised. Once again, most LCCCA board members learned about the latest delay from the local media.
The April 30th LCCCA meeting revealed just how angry its board members really are. When questioned about the latest delay, the master developer's representative initially declined to answer any questions. Only when irate board members made it clear that they expected some kind of accountability did the representatives of the project's master developer and construction manager respond, but then only with evasive and distracting answers. The majority of the LCCCA board made it clear that they want to know why this latest delay was not anticipated a few weeks earlier, and demanded that a report be presented during a special meeting to be held the following week.
Why was this delay in opening the hotel and convention center not anticipated?
The agreements which were sealed at the time of the March 2007 bond sale took all control of the project out of the hands of the Lancaster County Convention Center Authority. From that time on, the authority is limited to a caretaker role, with no power to make changes to the project or its schedule. The LCCCA cannot schedule events in its own convention center, nor can it even pick out the furnishings, floor coverings, or color of the wall! All of these are reserved for Interstate Hotels and Resorts, by agreements made years ago. It was even a struggle for the LCCCA to get the right to select artwork which is to be displayed inside its own building.
Apparently the LCCCA never even had the right to agree to their own project's construction schedule. When former LCCCA chairman Ted Darcus was asked at an April 2009 committee meeting if the board had agreed to the construction schedule during his tenure, he said that it did not. In any event, it is clear that the LCCCA cannot be responsible for any delays which occurred after the project was turned over to the master developer and construction manager after the March 2007 bond sale.
The LCCCA was consistently promised by the project's master developer and construction manager that the project would open on schedule. Why would they have made these promises, if they knew the schedule could not be met? The construction manager has been involved in hundreds of projects worth billions of dollars. The master developer has had even more real-world experience. Why would these seasoned professionals have not anticipated these supposedly last-minute delays?
The first delay was announced in November of 2008. By then, all of the issues and potential pitfalls should have been clearly identified. Unplanned rock removal and ground-water issues were already known when the March 2009 opening date was announced immediately after the construction bond sale in March 2007. The complexity of the project - including most unanticipated construction issues - should have been spelled out by the November 2008 announcement, when the project was already 70% complete; after all, the structure had been completely enclosed weeks earlier. The claims by the master developer and construction manager that the complexity of the project could not have been anticipated before the end of April 2009 do not ring true.
All of this is complicated by the fact that the master developer is the same company which is the general partner in the operation of the hotel, the general trades contractor for the entire project, and the precast concrete contractor for the entire project. These last-minute "unanticipated" delays have made the entire project, and every company associated with it, look very bad indeed. It would have been much better for all involved to have scheduled a June 2009 opening date in late 2008, rather than springing such an unpleasant surprise on the many people who had made plans for earlier events.
The claims made by the master developer and construction manager of the hotel and convention center that the complexity of the project led to these unexpected delays simply do not make sense. But then again, what else about this project does make any kind of sense?
Monday, April 20, 2009
Faith
"Now faith is being sure of what we hope for and certain of what we do not see."Why are certain individuals elected to serve in public office? Because we the people vote with our faith that these are the individuals who will best represent us in their respective roles. This faith is based on the candidates' promises and conduct during their election campaigns, and on their previous performance in positions of responsibility.
- Hebrews 11:1 (New International Version)
We the people have the right to expect that the individuals who we elect to public office will take actions that are in the best interests of all. For the most part, this is exactly what happens. Of course there are a very few politicians who turn out to be anything but what they presented themselves to be. Unfortunately, far too many other public officials occasionally take actions that seem to be the exact opposite of what they claim to believe in. For example, there are otherwise fiscally conservative politicians who will on occasion strongly support a prohibitively expensive and/or inappropriate public works or economic development project. Actions like these are often not only totally out of character for these individuals, but also defy logic and reason. These same public officials will do everything they possibly can to defend their actions, using rationalizations that they know will appeal to their constituents.
Why would otherwise believable public officials take actions that violate their own character? Because of the obstacles that anyone must overcome to make themselves acceptable as a candidate for public office.
Please note that these comments are based on my own personal observations of both major local political parties. I have personally done only a small amount of volunteer political work, but I've spent enough time around enough people who have been a part of the local political system to have gained some small understanding about how it works in Lancaster City and County.
To be successful in any election generally requires the endorsement of one of the two major political parties. This appears to be a result of the endorsed candidate's influence within their own party, and the influence of that local party on their adherents. We've all seen the valiant efforts put on by unendorsed candidates and independents, but they have rarely been successful. And to be endorsed, a person must first have endeared themselves to the political party of which they claim affiliation.
Generally, ingratiating oneself to a political party begins with a long track record of volunteer work. A person generally starts out by going door-to-door to support a party's candidates, working the phones, supporting a party's candidates in public or at the polls, or even by stuffing envelopes. Regularly attending political events of one's own party is a big plus. But dissenters and naysayers need not apply; a person must toe the local party line, or they will very quickly find that their help and assistance is no longer welcome.
After many months - or even years - of volunteer work, a person can graduate to the local political committee. The position of local committee person carries a large amount of responsibility; this individual must manage their party's grass roots activities in their own district, including working to find volunteers for jobs like poll worker. A person can either be elected or appointed to a committee position; if a district committee spot is open or up for election, a person can file the petitions to get their name on the ballot. Between elections, individuals can be appointed by the local party leadership to an open committee position (Lancaster City has a large number of vacant committee positions in both major parties). But anyone who serves on a political committee is expected to perform their duties for the betterment of their party, otherwise they will no longer be welcome. In exchange for their time and effort, committee people are permitted to vote for the candidates they want to see endorsed on the primary ballot.
What kind of individual is likely to be endorsed? Serving on a local political committee goes a LONG way toward being endorsed for election; committee members, like all other people, tend to support candidates who are most like they are, and who have achieved the same kinds of things that they have. This system tends to guarantee that individuals who have a proven record of toeing the party line are the ones who end up endorsed on the primary ballot, where they are most likely to win a spot in a general election.
There is one very large wild card in all of this: MONEY. Running for office is expensive. The only way anyone can expect to collect votes is if voters know who they are. Even the least significant elected position requires at least some promotional material, if nothing more than a handout used during door-to-door and face-to-face campaigning. Media advertising can get very expensive, very quickly; the more important the office, the larger the audience, the greater the cost.
Here is where the balance of power shifts: only a small percentage of the general public has enough disposable income available to make sizable contributions to political candidates. And people who are more well off financially are able to make more and larger political contributions, to more candidates. These individuals, as does everyone who can afford to, tend to donate to those candidates who support the policies that the contributors believe in. This gives an edge to those candidates who openly support the interests of people who have a greater than average disposable income. It also means that candidates tend to pay the most attention to the interests of the people who financially support them the most. And the candidates who run for the more prominent positions are the ones who need the most financial support. This process, by its very nature, tends to eliminate those individuals whose main priorities do not mesh with those of their most prolific political contributors.
This is why people who are prominent in business often become the most prominent in political affairs: the largest and most profitable businesses tend to earn the most money, and provide their most prominent employees with the largest financial rewards. These are the people who can afford to contribute the most money to political candidates.
This is why otherwise reasonable politicians will occasionally support unreasonable projects: to cater to the wishes of their biggest contributors. Of course, these elected officials always make an immense to make their proposals seem reasonable to the public.
This is why people and businesses impacted by these decisions, along with concerned citizens who care how our tax dollars are being spent, are almost always ignored - or worse. Even people who have logical and reasonable concerns about a project or an issue are often belittled, ridiculed, or even personally attacked for their stand; not because they are wrong, but because elected officials often consider the wishes of those who helped them get elected to be more important than the needs of their constituents.
This is why elected officials so often violate our faith in them.
"For the love of money is a root of all kinds of evil." - 1 Timothy 6:9-11 (New International Version)
Thursday, April 16, 2009
Still Hiring?
The local mainstream media has recently made a very big fuss about the job fairs held by Interstate Hotels and Resorts to hire staff for the downtown Lancaster, PA hotel and convention center. A large number of people applied for these jobs, several times over the number that were to be hired.
For some unknown reason, Interstate Hotels and Resorts is still looking for qualified people to work at the hotel and convention center at Penn Square.
The following advertisement appeared on "craigslist", the online advertising service, on April 14th, 2009:
http://lancaster.craigslist.org/fbh/1121708247.html
For some unknown reason, Interstate Hotels and Resorts is still looking for qualified people to work at the hotel and convention center at Penn Square.
The following advertisement appeared on "craigslist", the online advertising service, on April 14th, 2009:
http://lancaster.craigslist.org/fbh/1121708247.html
All FOH restaurant positions for new Convention Center (Lancaster)
Reply to: michelle.tessmer@ihrco.com
Date: 2009-04-14, 10:41AM EDTLancaster Marriott @ Penn Square is now hiring all FOH positions. Servers, Bussers, Bartenders, Barbacks, Host/ Hostess and Room Service. Full and Part time positions available. Experienced or Serious candidates Only! Those who qualify for full time recieve a great benefits package. Reply by email. Interviews are being held Thursday, April 16 and Friday April 17.PostingID: 1121708247
- Location: Lancaster
- Compensation: min + tips
- Principals only. Recruiters, please don't contact this job poster.
- Please, no phone calls about this job!
- Please do not contact job poster about other services, products or commercial interests.
Sunday, April 12, 2009
Trivia
Some useful trivia:
As of today, the LCCCA's web site lists the total cost of the taxpayer-financed hotel and convention center project in downtown Lancaster, PA as being $174.4 million. Of this, the Penn Square Partners are contributing $11 million in "equity", whatever that means, plus paying off a $24 million construction loan for 20 years. That means the actual cost of the project to taxpayers will be just under $140 million, not counting additional cost overruns
But wait, there's more:
A $14,523,716 construction loan for the hotel will be paid off with State "Act 23" grants of $1 million a year for 20 years. That means taxpayers will be paying over $5 million in interest for this one loan. This brings the total cost to taxpayers over $145 million.
Now, we could talk about excess interest costs to taxpayers. We could talk about operational subsidies which will cost taxpayers over $1 million a year, forever. We could talk about lost real estate taxes for the hotel, which will pay nothing at all for at least 20 years. We could talk about additional costs like "streetscape improvements", unscheduled street rebuilding and repaving, and the costs of additional police services.
We could even talk about State grants to the Stevens-Smith Historic Site, which would not exist in its present form had the LCCCA not planned to completely demolish its buildings (instead of the partial demolition which actually happened).
But this column is about trivia, so we'll stick to the $140 million up-front cost to taxpayers.
Lancaster County has approximately 500,000 residents. What happens when $140 million is divided by 500,000?
The taxpayer-financed hotel and convention center project has already cost each and every man, woman, and child who lives in all of Lancaster City and County about $280.
That's not such a trivial figure, is it?
As of today, the LCCCA's web site lists the total cost of the taxpayer-financed hotel and convention center project in downtown Lancaster, PA as being $174.4 million. Of this, the Penn Square Partners are contributing $11 million in "equity", whatever that means, plus paying off a $24 million construction loan for 20 years. That means the actual cost of the project to taxpayers will be just under $140 million, not counting additional cost overruns
But wait, there's more:
A $14,523,716 construction loan for the hotel will be paid off with State "Act 23" grants of $1 million a year for 20 years. That means taxpayers will be paying over $5 million in interest for this one loan. This brings the total cost to taxpayers over $145 million.
Now, we could talk about excess interest costs to taxpayers. We could talk about operational subsidies which will cost taxpayers over $1 million a year, forever. We could talk about lost real estate taxes for the hotel, which will pay nothing at all for at least 20 years. We could talk about additional costs like "streetscape improvements", unscheduled street rebuilding and repaving, and the costs of additional police services.
We could even talk about State grants to the Stevens-Smith Historic Site, which would not exist in its present form had the LCCCA not planned to completely demolish its buildings (instead of the partial demolition which actually happened).
But this column is about trivia, so we'll stick to the $140 million up-front cost to taxpayers.
Lancaster County has approximately 500,000 residents. What happens when $140 million is divided by 500,000?
The taxpayer-financed hotel and convention center project has already cost each and every man, woman, and child who lives in all of Lancaster City and County about $280.
That's not such a trivial figure, is it?
Friday, April 03, 2009
Moving forward
April 3, 2009 marks the fourth anniversary of Looking At Lancaster. This year our anniversary column will look ahead, spelling out our goals for the future.
Why do we write so much about the taxpayer-financed hotel and convention center project under construction in downtown Lancaster, PA?
Because the mainstream media has intentionally covered up, or put a positive spin on, the many ways this project has taken unfair advantage of taxpayers. If you don't read about it on the Internet, you won't be able to read about it anywhere else.
Moving forward, exactly what do we expect to achieve?
First of all, we do NOT wish for the hotel and convention center to fail. We're stuck with paying for it now, as will our children, grandchildren, and great-grandchildren. We do not believe that either the hotel or convention center will ever be allowed to fail; all it will take is more and more taxpayer dollars - along with a large amount of spin and propaganda by the local media - to keep it open.
Our goals are very specific:
(1) The major problems with this project must never be allowed to happen with other projects:
- The public never had a chance to approve or disapprove of the project.
- One company was allowed to dictate the terms and conditions of basically EVERYTHING, including the design of the project itself, and how taxpayer dollars will always be spent on the project.
- The project expanded in size and cost by two and one-half times, with no accountability to taxpayers or elected officials.
- Millions of dollars were spent on attorneys and consultants, with no accountability whatsoever.
- The agreements require taxpayers to pay for an unreasonably large portion of the "private" hotel's costs and expenses.
- The "economic development" which will be created by the project will never amount to any more than a small fraction of the taxpayer dollars spent on it.
(2) The agreements MUST be renegotiated.
Taxpayers are being taken advantage of so badly that it threatens the financial viability of the convention center, while the "private" hotel gets practically a free ride at taxpayer expense. To say "it is what it is" is disingenuous; it wouldn't take much investigation at all to uncover the serious conflicts of interest between the LCCCA's attorneys, and the "private" developer they were supposed to be negotiating with (instead of for).
Even if the hotel must be sold at auction, at a great initial loss to taxpayers, it would mean huge savings to the public over time as a private investor would pay their own operational costs - instead of depending on an unreasonable amount of tax exemptions and taxpayer dollars.
(3) The entire project must be investigated from its beginnings.
It is obvious to even the most casual observer of public meetings that most decisions were made in advance, behind closed doors. The extreme bias against taxpayers in the agreements which govern the project are indications of wrongdoing, as are the clear conflicts of interest between the LCCCA's attorneys and the "private" partners - especially since the LCCCA's attorneys were openly representing the "private" partners in other issues elsewhere. And the outrageous amount of money spent on consultants and legal counsel without adequate explanation clearly deserves investigating. Even the LCCCA itself is forever bound to an operational budget that is so tight there is NO money whatsoever available for any kind of internal investigation.
Any wrongdoing MUST be prosecuted to the fullest extent of the law. Otherwise, others will be encouraged to unfairly take advantage of taxpayers in the future.
(4) That we get on our knees and pray
We don't get fooled again.
(with apologies to The Who)
Why do we write so much about the taxpayer-financed hotel and convention center project under construction in downtown Lancaster, PA?
Because the mainstream media has intentionally covered up, or put a positive spin on, the many ways this project has taken unfair advantage of taxpayers. If you don't read about it on the Internet, you won't be able to read about it anywhere else.
Moving forward, exactly what do we expect to achieve?
First of all, we do NOT wish for the hotel and convention center to fail. We're stuck with paying for it now, as will our children, grandchildren, and great-grandchildren. We do not believe that either the hotel or convention center will ever be allowed to fail; all it will take is more and more taxpayer dollars - along with a large amount of spin and propaganda by the local media - to keep it open.
Our goals are very specific:
(1) The major problems with this project must never be allowed to happen with other projects:
- The public never had a chance to approve or disapprove of the project.
- One company was allowed to dictate the terms and conditions of basically EVERYTHING, including the design of the project itself, and how taxpayer dollars will always be spent on the project.
- The project expanded in size and cost by two and one-half times, with no accountability to taxpayers or elected officials.
- Millions of dollars were spent on attorneys and consultants, with no accountability whatsoever.
- The agreements require taxpayers to pay for an unreasonably large portion of the "private" hotel's costs and expenses.
- The "economic development" which will be created by the project will never amount to any more than a small fraction of the taxpayer dollars spent on it.
(2) The agreements MUST be renegotiated.
Taxpayers are being taken advantage of so badly that it threatens the financial viability of the convention center, while the "private" hotel gets practically a free ride at taxpayer expense. To say "it is what it is" is disingenuous; it wouldn't take much investigation at all to uncover the serious conflicts of interest between the LCCCA's attorneys, and the "private" developer they were supposed to be negotiating with (instead of for).
Even if the hotel must be sold at auction, at a great initial loss to taxpayers, it would mean huge savings to the public over time as a private investor would pay their own operational costs - instead of depending on an unreasonable amount of tax exemptions and taxpayer dollars.
(3) The entire project must be investigated from its beginnings.
It is obvious to even the most casual observer of public meetings that most decisions were made in advance, behind closed doors. The extreme bias against taxpayers in the agreements which govern the project are indications of wrongdoing, as are the clear conflicts of interest between the LCCCA's attorneys and the "private" partners - especially since the LCCCA's attorneys were openly representing the "private" partners in other issues elsewhere. And the outrageous amount of money spent on consultants and legal counsel without adequate explanation clearly deserves investigating. Even the LCCCA itself is forever bound to an operational budget that is so tight there is NO money whatsoever available for any kind of internal investigation.
Any wrongdoing MUST be prosecuted to the fullest extent of the law. Otherwise, others will be encouraged to unfairly take advantage of taxpayers in the future.
(4) That we get on our knees and pray
We don't get fooled again.
(with apologies to The Who)
Sunday, March 29, 2009
FORGET ABOUT IT!
" 'Meaningless! Meaningless!' says the Teacher. 'Utterly meaningless! Everything is meaningless.' " - Ecclesiastes 1:2 (New International Version).
# # #
"In a display that united old foes and bridged city-county and Republican- Democrat differences, county leaders have embraced plans for a $75 million downtown hotel and convention center with almost religious zeal…
Representatives of Ernst & Young, an international accounting firm and industry leader in real estate analysis, presented the findings of their study supporting the plan.
The project includes a 281-room four-star hotel, a 61,000-square- foot convention center built on vacant land adjacent to the former store and on the site of Oblender's Inc. furniture store, and a $7 million expansion and renovation of the King Street parking garage…
After completion, the project would employ 577 full-time workers, generate $13.3 million annually in sales, income and personal income taxes and create another $30.7 million annually in local goods and services, she said." - Lancaster New Era, August 26, 1999.
# # #
On July 24, 2001, at a news conference in Penn Square, State Senator Gibson E. Armstrong announced that the hotel and convention center would "create 300 to 400 new jobs, meaningful jobs for people in downtown Lancaster".
# # #
"With unemployment at its highest level in a quarter-century, Mark Moosic is expecting a crowd on Tuesday and Wednesday…
He said Interstate Hotels will be hiring between 125 and 170 workers. Some of them will be part-time, he said. The equivalent of 125 and 150 full-time positions will be needed to staff the facility, he said." - Lancaster New Era, March 9, 2009.
# # #
When these broken promises were brought to the attention of current LCCCA chairman Art Morris during a public meeting, his only comment was that he could not speak to what was promised in the past.
Of course this is true. Art Morris was handed leadership of the LCCCA only after the bonds were sold, contracts were awarded, and construction had begun. Art Morris, LCCCA executive director Kevin Molloy, and most of the current LCCCA board had nothing at all to do with creating the current project (the sole exception being former chairman Ted Darcus).
So who can be held responsible for these unrealistic promises?
No representative from the Penn Square Partners has attended a public meeting since the construction bonds were sold. Sen. Gib Armstrong has retired from public office. Ernst & Young never performed another study of the hotel and convention center project.
Not only will the $175 million hotel and convention center only create one-quarter to one-half of the number of jobs which were promised for the original $75 million proposal, but two deadlines have already been pushed back, and the current deadline is in jeopardy.
But that wasn't the only promise that has been broken recently:
# # #
"With the two bonds in place, developers expect to move forward with construction of the hotel/convention center. They expect to open the facility in fall 2008." - Intelligencer Journal, March 29, 2007
# # #
"The result is that the fall 2008 opening planned for the center has likely been pushed back as much as six months, to the spring of 2009." - Lancaster New Era, June 8, 2007
# # #
"Developers of the hotel/convention center in downtown Lancaster have designated April 21, 2009, a Tuesday, as the official opening date for the $170 million project." - Intelligencer Journal, November 21, 2008.
# # #
"Operators of the hotel/convention center on Penn Square announced Wednesday they are moving the "anticipated" opening date back three weeks from April 21 to the week of May 11.
Building and outfitting the $170 million Marriott Hotel and 220,000-square-foot convention center is taking longer than expected, which forced the rescheduling of as many as a dozen events, officials said." - Intelligencer Journal, March 26, 2009.
# # #
At the LCCCA board meeting held on March 26, 2008, it was announced that no additional events were being booked during the month of May. Obviously this would make an additional three-week delay easier to deal with.
Once again, who can be held responsible?
The decision to rush the construction of the hotel and convention center was made while Dave Hixson was still executive director of the LCCCA, and Ted Darcus was still chairman. However, there is no public indication that either had anything to do with these plans. It would appear that the schedule was dictated by the Penn Square Partners, for reasons undisclosed to the public.
So what is the public supposed to do?
From the very beginning, those behind this project have expected us to do nothing more than "FORGET ABOUT IT!"
Sunday, March 22, 2009
Busy week
We've had a very busy week in the world of the Internet. We haven't had time to write a real post for this week.
So, we're taking a week off.
A few comments, following up on last week's article:
LIP News has announced a major redesign. The "Site Studio" software that writes such convoluted HTML code is being replaced with WordPress, the extremely popular Open Source web site software. The change to WordPress means that LIP News will load and view much more quickly for its readers.
After many months with few changes, Lancaster First is in the process of being updated. Among other things, more pictures of downtown Lancaster in the 1960s have been posted, and more are coming. Lancaster First has become the best site to find background information about the downtown Lancaster hotel and convention center project.
Our friends over at NewsLanc.com have added another article in their revealing investigative series about the hotel and convention center project. This article is most highly recommended reading. You can see it here:
http://newslancpa.blogspot.com/2009/03/fifth-in-series-now-that-reporter-jim.html
Speaking of NewsLanc.com, a letter has recently been posted there which we find extremely interesting:
http://newslancletters.blogspot.com/2009/03/feed-back-from-cc-walk-through-tour.html
So, we're taking a week off.
A few comments, following up on last week's article:
LIP News has announced a major redesign. The "Site Studio" software that writes such convoluted HTML code is being replaced with WordPress, the extremely popular Open Source web site software. The change to WordPress means that LIP News will load and view much more quickly for its readers.
After many months with few changes, Lancaster First is in the process of being updated. Among other things, more pictures of downtown Lancaster in the 1960s have been posted, and more are coming. Lancaster First has become the best site to find background information about the downtown Lancaster hotel and convention center project.
Our friends over at NewsLanc.com have added another article in their revealing investigative series about the hotel and convention center project. This article is most highly recommended reading. You can see it here:
http://newslancpa.blogspot.com/2009/03/fifth-in-series-now-that-reporter-jim.html
Speaking of NewsLanc.com, a letter has recently been posted there which we find extremely interesting:
http://newslancletters.blogspot.com/2009/03/feed-back-from-cc-walk-through-tour.html
Sunday, March 15, 2009
Local News and Comment
Since you are reading this, you are already aware that the Internet offers the opportunity for individuals and groups to publish and widely distribute local news and commentary in ways that would have been impossible only a few years ago. LookingAtLancaster.com is only one out of a number of sites that offer alternatives to the mainstream media. With few exceptions, these are a labor of love, created and maintained not for profit but out of a concern for our community.
These independent news and opinion sites often publish information that is neglected or ignored by the local newspapers and television stations. Occasionally, independent sites have broken important stories long before the print or broadcast media. At other times, when the mainstream media has intentionally distorted the "news" in a way to serve their own interests, alternative news sites have been the only way for the public to get the facts, often obtained directly from the sources and parties involved.
Below is a brief description of a few of the most popular independent Web sites and alternative news sources which have made an impact on Lancaster. There are other sites online which discuss local issues; some of these are independent, others represent specific groups or organizations. This article does not include online forums, where people have the opportunity to discuss the issues of the day; that topic is deserving of an article of its own.
NewsLanc.com clearly stands out as a real alternative to the mainstream media. Managed and funded by Robert Field, a local apartment and hotel developer with properties around the world, NewsLanc.com has a full-time reporter dedicated to local issues, in addition to contributions from volunteers. NewsLanc.com has broken a number of stories, most notably about the public library. This site has also been publishing an in-depth investigative series about the hotel and convention center project; these articles have publicly revealed the misuse of millions of taxpayer dollars, an issue which has been intentionally neglected by the mainstream local media. NewsLanc.com has the potential of becoming serious competition to the local newspapers.
LIP News (www.lipnews1.com) is an alternative news and opinion site operated by Becky Holzinger. LIP News has revealed a great deal of information about issues neglected by the mainstream local media, most recently concerning the Roseboro/Funk murder case in Denver, as well as the abuse of a female minority suspect by male officers in New Holland. Becky Holzinger's commentary can be controversial, but it is always well worth reading.
Unfortunately, a number of once-prominent local sites are no longer being updated on a regular basis.
Lancaster First (LancasterFirst.org) began life as the online voice of the Lancaster First ad-hoc community group. LancasterFirst.org became a news site in its own right, breaking a number of stories about the hotel and convention center project in downtown Lancaster. This site is no longer updated on a regular basis, but recently has posted several significant additions. LancasterFirst.org will continue to be maintained as an archive of potentially valuable information for the foreseeable future; for example, this site is the ONLY place where the agreements and other documents governing the hotel and convention center project are available online.
Lanco Yokels (lancoyokels.blogspot.com) USED to be a source for the some of the most astute commentary about Lancaster County which was available anywhere. Unfortunately, its author apparently suffered from burn-out, and only a placeholder for the site remains. Some of us still hold out hope that Lanco Yokels will return some day.
The granddaddy of all the local alternative news sites, and the one which has had the greatest impact, is 5thEstate.com. No longer being updated, the site is being maintained as an archive. 5thEstate.com was a labor of love by local activist Ron Harper Jr., who for seven years single-handedly took on the Lancaster establishment. 5thEstate.com has had a tremendous impact on Lancaster: one state representative, several district justices, and a number of constables were forced to resign as a result of articles which appeared there. A school superintendent was revealed to have misused his authority for his own personal gain, for which he later served time in prison, because of information first made public on 5thEstate.com. Other revelations posted on 5thEstate.com resulted in dramatic changes in how the Lancaster County Convention Center Authority conducts its business in public. Even the local newspapers have improved their reporting after being scooped repeatedly by 5thEstate.com.
Unfortunately, 5thEstate.com eventually became too much for one person to handle by themselves. Ron Harper Jr. took on a partner, and together they founded the Lancaster Post (LancasterPost.com). For six months, both online and in a print edition, the Lancaster Post provided an outstanding weekly news and commentary alternative to the mainstream media. But when financing became an issue, the Lancaster Post ceased publishing, and the partners went their separate ways. LancasterPost.com is still online, and all of its editions are still available for download. There is no word if or when LancasterPost.com will resume publishing.
The Internet provides more opportunities for individuals and groups to reach others than at any other time in history. For example, LookingAtLancaster.com is hosted on Blogger, a free blogging service from Google (the search engine masters). The domain LookingAtLancaster.com is forwarded to lookingatlancaster.blogspot.com, where its articles actually reside. Anyone can open a Blogger account for free, and start posting almost immediately. Blogger is easy to use, easy to customize, and requires little knowledge about the Internet to use. Who knows: it is entirely possible that someone reading this article will start a site that eventually becomes a major influence within Lancaster County.
These independent news and opinion sites often publish information that is neglected or ignored by the local newspapers and television stations. Occasionally, independent sites have broken important stories long before the print or broadcast media. At other times, when the mainstream media has intentionally distorted the "news" in a way to serve their own interests, alternative news sites have been the only way for the public to get the facts, often obtained directly from the sources and parties involved.
Below is a brief description of a few of the most popular independent Web sites and alternative news sources which have made an impact on Lancaster. There are other sites online which discuss local issues; some of these are independent, others represent specific groups or organizations. This article does not include online forums, where people have the opportunity to discuss the issues of the day; that topic is deserving of an article of its own.
NewsLanc.com clearly stands out as a real alternative to the mainstream media. Managed and funded by Robert Field, a local apartment and hotel developer with properties around the world, NewsLanc.com has a full-time reporter dedicated to local issues, in addition to contributions from volunteers. NewsLanc.com has broken a number of stories, most notably about the public library. This site has also been publishing an in-depth investigative series about the hotel and convention center project; these articles have publicly revealed the misuse of millions of taxpayer dollars, an issue which has been intentionally neglected by the mainstream local media. NewsLanc.com has the potential of becoming serious competition to the local newspapers.
LIP News (www.lipnews1.com) is an alternative news and opinion site operated by Becky Holzinger. LIP News has revealed a great deal of information about issues neglected by the mainstream local media, most recently concerning the Roseboro/Funk murder case in Denver, as well as the abuse of a female minority suspect by male officers in New Holland. Becky Holzinger's commentary can be controversial, but it is always well worth reading.
Unfortunately, a number of once-prominent local sites are no longer being updated on a regular basis.
Lancaster First (LancasterFirst.org) began life as the online voice of the Lancaster First ad-hoc community group. LancasterFirst.org became a news site in its own right, breaking a number of stories about the hotel and convention center project in downtown Lancaster. This site is no longer updated on a regular basis, but recently has posted several significant additions. LancasterFirst.org will continue to be maintained as an archive of potentially valuable information for the foreseeable future; for example, this site is the ONLY place where the agreements and other documents governing the hotel and convention center project are available online.
Lanco Yokels (lancoyokels.blogspot.com) USED to be a source for the some of the most astute commentary about Lancaster County which was available anywhere. Unfortunately, its author apparently suffered from burn-out, and only a placeholder for the site remains. Some of us still hold out hope that Lanco Yokels will return some day.
The granddaddy of all the local alternative news sites, and the one which has had the greatest impact, is 5thEstate.com. No longer being updated, the site is being maintained as an archive. 5thEstate.com was a labor of love by local activist Ron Harper Jr., who for seven years single-handedly took on the Lancaster establishment. 5thEstate.com has had a tremendous impact on Lancaster: one state representative, several district justices, and a number of constables were forced to resign as a result of articles which appeared there. A school superintendent was revealed to have misused his authority for his own personal gain, for which he later served time in prison, because of information first made public on 5thEstate.com. Other revelations posted on 5thEstate.com resulted in dramatic changes in how the Lancaster County Convention Center Authority conducts its business in public. Even the local newspapers have improved their reporting after being scooped repeatedly by 5thEstate.com.
Unfortunately, 5thEstate.com eventually became too much for one person to handle by themselves. Ron Harper Jr. took on a partner, and together they founded the Lancaster Post (LancasterPost.com). For six months, both online and in a print edition, the Lancaster Post provided an outstanding weekly news and commentary alternative to the mainstream media. But when financing became an issue, the Lancaster Post ceased publishing, and the partners went their separate ways. LancasterPost.com is still online, and all of its editions are still available for download. There is no word if or when LancasterPost.com will resume publishing.
The Internet provides more opportunities for individuals and groups to reach others than at any other time in history. For example, LookingAtLancaster.com is hosted on Blogger, a free blogging service from Google (the search engine masters). The domain LookingAtLancaster.com is forwarded to lookingatlancaster.blogspot.com, where its articles actually reside. Anyone can open a Blogger account for free, and start posting almost immediately. Blogger is easy to use, easy to customize, and requires little knowledge about the Internet to use. Who knows: it is entirely possible that someone reading this article will start a site that eventually becomes a major influence within Lancaster County.
Sunday, March 08, 2009
Guessing Game
Any project that involves cash flow needs to have a business plan. This includes the taxpayer-financed convention center project in downtown Lancaster.
Unfortunately, the few convention center revenue projections released to the public seem to be a part of some kind of guessing game.
One of the first "pro-forma" projections available was a in a presentation to the Lancaster County Convention Center Authority board on February 22, 2006. The projection of first full-year revenue was estimated to be $1,272,799.
The only estimate of convention center revenue to be widely distributed was published in the Lancaster New Era on Thursday, June 14, 2007, page A4. It projected the first full year of operation would generate $1,577,000 in gross revenue.
The first revenue projection available to the public from Interstate Hotels and Resorts, the joint manager of both the hotel and convention center, was created on November 6, 2007. At this point, IHR was using a "stub" year for 2009, from the opening of the convention center until the end of the calendar year; this estimate was $971,636 for nine months - roughly in line with the February 2006 projection.
Late in 2008, IHR switched to a fiscal year, to align their operational budget with the long-established fiscal year used by the LCCCA. In November of 2008, IHR released a projected operating budget for Fiscal Year 2010 (April 1, 2009 through March 31, 2010). This document included figures from a "pro-forma" dated February of 2008; at that time, convention center revenue for the first full year of operation was estimated to be $1,149,267. But as of November of 2008, the anticipated first year's gross income was down to $957,840.
At the LCCCA Public Relations, Marketing & Hospitality Committee meeting held on Thursday, February 19, 2009, IHR presented its latest estimates of operational income for the convention center. At that time, the total projected revenue of the first full year of operation for the convention center was down to $514,935, or less than a third of the amount published in the local newspapers in June of 2007 (only twenty months earlier).
The February 2007 IHR presentation also included the amount of revenue booked to date. As of the date of this presentation, IHR had commitments for five trade shows, matching its latest goals, and eight consumer shows, out of an updated goal of eleven. It is highly unlikely that a significant number of large events will be added at this late date. Where bookings have fallen short of goals is in "other" events, which could be anything from a wedding reception to a conference; so far, only eleven have been booked, out of a goal of 52. It is possible that more of these types of events will be booked, but the goal appears unreachable. Consequently, the total amount of revenue contracted to date is estimated to be only $235,886, or only 15% of the amount published in the newspaper during June of 2007.
If revenue from the "hotel tax" would have continued at the rate estimated in late 2007, there should have been enough money left after construction bond payments to balance the budget. However, "hotel tax" revenue during 2008 fell nearly 5% below the previous year's receipts through November, the last month currently available. (It is worth noting that both September and November had revenue shortfalls of more than 25% over the previous year.) Figures for 2009 are not yet available, but as the recession has deepened, the dramatic decrease in "hotel tax" income during late 2008 is likely to continue.
To make matters worse for the LCCCA, market rates have at times been outside of the range allotted in the construction bond sale's interest rate "swap". This has already cost the LCCCA tens of thousands of dollars beyond its budget for bond payments.
What does this mean for Lancaster County taxpayers? It is entirely possible that the LCCCA will not collect enough money from the "hotel tax" and convention center revenue combined to cover its bond payments and operational costs. This means that a tax increase of some kind will be inevitable, whether in the "hotel tax" (which is limited by State law) or in Lancaster County property taxes, perhaps as soon as next year (2010).
Unfortunately, the few convention center revenue projections released to the public seem to be a part of some kind of guessing game.
One of the first "pro-forma" projections available was a in a presentation to the Lancaster County Convention Center Authority board on February 22, 2006. The projection of first full-year revenue was estimated to be $1,272,799.
The only estimate of convention center revenue to be widely distributed was published in the Lancaster New Era on Thursday, June 14, 2007, page A4. It projected the first full year of operation would generate $1,577,000 in gross revenue.
The first revenue projection available to the public from Interstate Hotels and Resorts, the joint manager of both the hotel and convention center, was created on November 6, 2007. At this point, IHR was using a "stub" year for 2009, from the opening of the convention center until the end of the calendar year; this estimate was $971,636 for nine months - roughly in line with the February 2006 projection.
Late in 2008, IHR switched to a fiscal year, to align their operational budget with the long-established fiscal year used by the LCCCA. In November of 2008, IHR released a projected operating budget for Fiscal Year 2010 (April 1, 2009 through March 31, 2010). This document included figures from a "pro-forma" dated February of 2008; at that time, convention center revenue for the first full year of operation was estimated to be $1,149,267. But as of November of 2008, the anticipated first year's gross income was down to $957,840.
At the LCCCA Public Relations, Marketing & Hospitality Committee meeting held on Thursday, February 19, 2009, IHR presented its latest estimates of operational income for the convention center. At that time, the total projected revenue of the first full year of operation for the convention center was down to $514,935, or less than a third of the amount published in the local newspapers in June of 2007 (only twenty months earlier).
The February 2007 IHR presentation also included the amount of revenue booked to date. As of the date of this presentation, IHR had commitments for five trade shows, matching its latest goals, and eight consumer shows, out of an updated goal of eleven. It is highly unlikely that a significant number of large events will be added at this late date. Where bookings have fallen short of goals is in "other" events, which could be anything from a wedding reception to a conference; so far, only eleven have been booked, out of a goal of 52. It is possible that more of these types of events will be booked, but the goal appears unreachable. Consequently, the total amount of revenue contracted to date is estimated to be only $235,886, or only 15% of the amount published in the newspaper during June of 2007.
If revenue from the "hotel tax" would have continued at the rate estimated in late 2007, there should have been enough money left after construction bond payments to balance the budget. However, "hotel tax" revenue during 2008 fell nearly 5% below the previous year's receipts through November, the last month currently available. (It is worth noting that both September and November had revenue shortfalls of more than 25% over the previous year.) Figures for 2009 are not yet available, but as the recession has deepened, the dramatic decrease in "hotel tax" income during late 2008 is likely to continue.
To make matters worse for the LCCCA, market rates have at times been outside of the range allotted in the construction bond sale's interest rate "swap". This has already cost the LCCCA tens of thousands of dollars beyond its budget for bond payments.
What does this mean for Lancaster County taxpayers? It is entirely possible that the LCCCA will not collect enough money from the "hotel tax" and convention center revenue combined to cover its bond payments and operational costs. This means that a tax increase of some kind will be inevitable, whether in the "hotel tax" (which is limited by State law) or in Lancaster County property taxes, perhaps as soon as next year (2010).
Sunday, March 01, 2009
Strings Attached
Former defense attorney J. Richard Gray - known to all as Rick - has been doing an exemplary job as mayor of Lancaster, Pennsylvania over the last three years.
For the most part.
There can be no question that Rick Gray has done much to improve the operation and the finances of the Lancaster City government. After inheriting a $7 million deficit, Rick Gray has presented budgets which reduced deficit spending with only minimal tax increases. The number of people employed by Lancaster City has dropped since Rick Gray took office, with some positions combined, and others eliminated completely.
Gray has refocused the city government to get better results. Customer service personnel have been reshuffled to better respond to the needs of residents. A neglected portable truck scales was brought out of storage, and police officers were trained in truck inspections. Electrical vehicle speed measuring devices (similar to VASCAR) have been purchased, and are being used to catch speeders. And the long-neglected "boot" program for traffic scofflaws was restarted.
Rick Gray is willing to spend money when it will save taxpayer dollars in the long run. Outdated and worn-out equipment has been replaced and upgraded when appropriate. All of the city's desktop computers are being replaced with upgraded models. Desperately needed fire trucks and safety apparatus have been purchased. And new automobiles for city staff have been bought (through a purchasing consortium) to replace others which are as much as 20 years old, while providing vehicles for other city employees who currently are reimbursed by the mile - all of which will save money for city taxpayers.
Rick Gray has repeatedly proven himself to be a strong and effective manager. Gray's selection for fire chief, Tim Gregg, is a firefighter with more than two decades' service in Lancaster who has outstanding management and organizational skills, in addition to being a "people person" and an all-around nice guy. For Chief of Police, an outsider was brought to Lancaster from Philadelphia, a ranking officer with proven management skills who is tough enough to deal with the kind of personnel issues that occasionally appear among any group of strong-willed individuals (a police official once compared managing detectives to "herding cats").
Productivity and attitudes of Lancaster City personnel have improved remarkably under Rick Gray. After being downsized and disrupted by previous mayors, morale in the Fire Department is once again high (although staffing remains at historically low levels, specifically because of Lancaster City's difficult budget issues). Other officials like Randy Patterson (brought in by Gray for the combined position of Director of Economic Development & Neighborhood Revitalization) and Patrick Hopkins (Director of Administrative Services) have worked with their staffs to more efficiently obtain the results that Lancaster City needs.
Rick Gray has made a number of proposals, some controversial, designed at making Lancaster City a better place to live and work. Gray was able to hire a consultant to study Lancaster City government, and make recommendations to make it more efficient and more effective; some of these proposals have already been adopted. Gray's single trash hauler program has noticeably improved trash collection, and saved residents money over what the largest companies used to charge. Gray negotiated a tough new licensing agreement with Comcast, which creates new public access cable channels, and provides local government and schools with free services. Gray instituted regular inspections of all rental housing units in Lancaster City, improving living conditions for many people. Gray pushed through a comprehensive update of rental housing regulations, designed to better protect renters, landlords, and neighbors. Rick Gray has even begun to examine zoning practices within Lancaster City, and has taken the first steps toward a more appropriate neighborhood-based zoning method.
Unfortunately, Rick Gray has his flaws.
Gray has a preoccupation with grandiose projects, some of which threaten to be costly for Lancaster City taxpayers in more ways than one. For example, the "streetscape improvements" currently under way in downtown Lancaster - which include drastic "traffic calming" narrowing of traffic lanes - have already torn up sidewalks that clearly did not need replacing. Using borrowed money to give the sidewalks of downtown Lancaster a "unified" look, while Lancaster City government is still spending more than it collects in revenue, is a questionable idea at best. And the current proposal to rebuild the northwest quadrant of Penn Square not only clashes with the "streetscape improvements", it is out of character for the historic buildings located there.
Rick Gray has been an outspoken champion of a proposed streetcar system in downtown Lancaster. To promote the streetcar proposal, Gray has permitted the indefinite display of a repainted Philadelphia trolley in a prominent position on public property downtown, next to the police station. (This streetcar appears to be far too long to navigate the tight intersections of Lancaster City streets.) The streetcar project would only benefit a small number of individuals, while restricting traffic flow and making streets less safe for motorcycles, bicycles, and pedestrians. Appeals for increasingly scarce State and Federal funds at a time of budget cutbacks and increasing opposition to "pork" projects like this one do not make sense.
The one area where Rick Gray's reach has clearly exceeded his grasp is in his support for the downtown hotel and convention center project. For example, when higher than expected construction bids created a $20 million budget gap for the project in the summer of 2006, Gray announced a complex plan to provide enough funding so construction could begin. Much of Gray's plan proved to be nothing more than smoke and mirrors; many of Gray's proposals never happened. Instead, the LCCCA simply borrowed millions of dollars more than was originally planned.
In early 2005, as Rick Gray was beginning his campaign for mayor, he clearly stated to a number of different people his concerns about several aspects of the hotel and convention center project. Yet by late spring, Gray had become an enthusiastic supporter of the project. This turnabout was so sudden and so dramatic that it appears someone may have been pulling his strings. To Gray's credit, he has at times expressed concern over the burden placed on Lancaster City taxpayers by his predecessor to guarantee the government-owned "private" hotel. And Gray's appointment of former mayor Art Morris to the LCCCA board, where he quickly became chairman, belatedly brought real accountability to the project.
There are other issues. For example, Gray and his staff have already been working toward the creation of a taxpayer-funded performing arts center (which will exempt even more prime real estate from paying taxes). And the partial demolition of the east side of Lancaster Square, while well-intentioned, will leave a starkly featureless open space downtown which could remain that way for many years.
Rick Gray has undoubtedly been the single most effective mayor of Lancaster for decades. Gray clearly deserves to be re-elected for another term in office. But the reason Gray has been only a good mayor, and not a great one, is his enthusiastic support for expensive grandiose and inappropriate projects in downtown Lancaster.
For the most part.
There can be no question that Rick Gray has done much to improve the operation and the finances of the Lancaster City government. After inheriting a $7 million deficit, Rick Gray has presented budgets which reduced deficit spending with only minimal tax increases. The number of people employed by Lancaster City has dropped since Rick Gray took office, with some positions combined, and others eliminated completely.
Gray has refocused the city government to get better results. Customer service personnel have been reshuffled to better respond to the needs of residents. A neglected portable truck scales was brought out of storage, and police officers were trained in truck inspections. Electrical vehicle speed measuring devices (similar to VASCAR) have been purchased, and are being used to catch speeders. And the long-neglected "boot" program for traffic scofflaws was restarted.
Rick Gray is willing to spend money when it will save taxpayer dollars in the long run. Outdated and worn-out equipment has been replaced and upgraded when appropriate. All of the city's desktop computers are being replaced with upgraded models. Desperately needed fire trucks and safety apparatus have been purchased. And new automobiles for city staff have been bought (through a purchasing consortium) to replace others which are as much as 20 years old, while providing vehicles for other city employees who currently are reimbursed by the mile - all of which will save money for city taxpayers.
Rick Gray has repeatedly proven himself to be a strong and effective manager. Gray's selection for fire chief, Tim Gregg, is a firefighter with more than two decades' service in Lancaster who has outstanding management and organizational skills, in addition to being a "people person" and an all-around nice guy. For Chief of Police, an outsider was brought to Lancaster from Philadelphia, a ranking officer with proven management skills who is tough enough to deal with the kind of personnel issues that occasionally appear among any group of strong-willed individuals (a police official once compared managing detectives to "herding cats").
Productivity and attitudes of Lancaster City personnel have improved remarkably under Rick Gray. After being downsized and disrupted by previous mayors, morale in the Fire Department is once again high (although staffing remains at historically low levels, specifically because of Lancaster City's difficult budget issues). Other officials like Randy Patterson (brought in by Gray for the combined position of Director of Economic Development & Neighborhood Revitalization) and Patrick Hopkins (Director of Administrative Services) have worked with their staffs to more efficiently obtain the results that Lancaster City needs.
Rick Gray has made a number of proposals, some controversial, designed at making Lancaster City a better place to live and work. Gray was able to hire a consultant to study Lancaster City government, and make recommendations to make it more efficient and more effective; some of these proposals have already been adopted. Gray's single trash hauler program has noticeably improved trash collection, and saved residents money over what the largest companies used to charge. Gray negotiated a tough new licensing agreement with Comcast, which creates new public access cable channels, and provides local government and schools with free services. Gray instituted regular inspections of all rental housing units in Lancaster City, improving living conditions for many people. Gray pushed through a comprehensive update of rental housing regulations, designed to better protect renters, landlords, and neighbors. Rick Gray has even begun to examine zoning practices within Lancaster City, and has taken the first steps toward a more appropriate neighborhood-based zoning method.
Unfortunately, Rick Gray has his flaws.
Gray has a preoccupation with grandiose projects, some of which threaten to be costly for Lancaster City taxpayers in more ways than one. For example, the "streetscape improvements" currently under way in downtown Lancaster - which include drastic "traffic calming" narrowing of traffic lanes - have already torn up sidewalks that clearly did not need replacing. Using borrowed money to give the sidewalks of downtown Lancaster a "unified" look, while Lancaster City government is still spending more than it collects in revenue, is a questionable idea at best. And the current proposal to rebuild the northwest quadrant of Penn Square not only clashes with the "streetscape improvements", it is out of character for the historic buildings located there.
Rick Gray has been an outspoken champion of a proposed streetcar system in downtown Lancaster. To promote the streetcar proposal, Gray has permitted the indefinite display of a repainted Philadelphia trolley in a prominent position on public property downtown, next to the police station. (This streetcar appears to be far too long to navigate the tight intersections of Lancaster City streets.) The streetcar project would only benefit a small number of individuals, while restricting traffic flow and making streets less safe for motorcycles, bicycles, and pedestrians. Appeals for increasingly scarce State and Federal funds at a time of budget cutbacks and increasing opposition to "pork" projects like this one do not make sense.
The one area where Rick Gray's reach has clearly exceeded his grasp is in his support for the downtown hotel and convention center project. For example, when higher than expected construction bids created a $20 million budget gap for the project in the summer of 2006, Gray announced a complex plan to provide enough funding so construction could begin. Much of Gray's plan proved to be nothing more than smoke and mirrors; many of Gray's proposals never happened. Instead, the LCCCA simply borrowed millions of dollars more than was originally planned.
In early 2005, as Rick Gray was beginning his campaign for mayor, he clearly stated to a number of different people his concerns about several aspects of the hotel and convention center project. Yet by late spring, Gray had become an enthusiastic supporter of the project. This turnabout was so sudden and so dramatic that it appears someone may have been pulling his strings. To Gray's credit, he has at times expressed concern over the burden placed on Lancaster City taxpayers by his predecessor to guarantee the government-owned "private" hotel. And Gray's appointment of former mayor Art Morris to the LCCCA board, where he quickly became chairman, belatedly brought real accountability to the project.
There are other issues. For example, Gray and his staff have already been working toward the creation of a taxpayer-funded performing arts center (which will exempt even more prime real estate from paying taxes). And the partial demolition of the east side of Lancaster Square, while well-intentioned, will leave a starkly featureless open space downtown which could remain that way for many years.
Rick Gray has undoubtedly been the single most effective mayor of Lancaster for decades. Gray clearly deserves to be re-elected for another term in office. But the reason Gray has been only a good mayor, and not a great one, is his enthusiastic support for expensive grandiose and inappropriate projects in downtown Lancaster.
