NewsLanc.Com

    Providing Greater Lancaster with an Alternative Source for Local News and Commentary _________________________________________________________
  October 11, 2006                                         Publisher: NewsLanc.com, LLC                               Volume 1, Number 10

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Make Your Voice Heard
Write a letter, make a call:

Edward G. Rendell, Governor
225 Main Capitol Building
Harrisburg PA 17120
(717) 787-2500
E-mail the Governor here.

Gibson Armstrong, State Senator
(717) 787-6535
garmstrong@pasen.gov

Mike Sturla, State Representative
(717) 295-3157
msturla@pahouse.net

J. Richard Gray, Mayor, City of Lancaster
(717) 291-4701
mayorsoffice@cityoflancasterpa.com

Ernest Schreiber, Editor
Lancaster New Era
eschreiber@lnpnews.com
(717) 291-8733

C. Ray Shaw, Editor
Intelligencer Journal
rshaw@lnpnews.com
(717) 291-8650

Marvin Adams, Editor
Sunday News
madams@lnpnews.com
(717) 291-8788
Court Testimony Reveals $27 Million
Convention Center-Hotel Funding Gap

From the sworn testimony from officials of the Convention Center project and others who recently testified in court,
$27 million is still needed to close the funding gap of the controversial downtown project.

Specific reported shortfalls include:
    • The Historic Preservation Trust has not approved $1.9 million in construction costs;
    • Trade contractors have not approved value engineering proposals in the amount of $2,750,693;
    • $2.1 million attributable to a proposed amendment to the project's general conditions of contract;
    • $7 million shortfall in debt service capabilities;
    • $13.6 million from the Infrastructure and Facility Improvement Program, which is presently being litigated.

$7 Million 'Swiped' from Parking
Authority to Help Close Gap


To reduce the funding gap to the $27 million level, the Convention Center Authority will renege on a promised gift of a $7 million multistory parking garage, free and clear of encumbrances, to the Lancaster [City] Parking Authority.

Instead, Lancaster Newspapers, Inc. will loan $3 million, interest free, for a three year term to the parking authority to the parking authority so that the authority can purchase a parking lot provided by the Newspapers.


City taxpayers: You just potentially lost $7 million (about $350 per household) and have taken on $3 million in additional debt.


Commissioners Anticipate Tax
Increases to Bail Out City
and Convention Center
Authority Guarantees

Commissioners Dick Shellenberger and Molly Henderson anticipate future demands to raise county taxes to defray the predicted Convention Center / Hotel project operating deficit.

The PKF Consultants, Inc. feasibility study predicted annual project deficits of $2.4 million to $4.8 million and recommended downsizing or another use of the site. And their report was before the amount to be borrowed was substantially increased.

The commissioners fear that the project won’t cover debt payments on the $40 million in construction bonds and the proposed $14 million in additional bonds of which half would be guaranteed by the county and half by the Lancaster County Convention Center Authority (LCCCA).

The LCCCA has no taxing power so cannot fund its guarantee.

In order to avoid a huge spike in city real estate taxes, the city will likely seek relief from the county.

"One of the duties of a county commissioner is to be aware of taxpayer money, and this is part of that," Henderson said.

Court Testimony Reveals
Sham Agreement

Guarantee Violated Enabling Statute

    In December, 2003, the outgoing board of commissioners entered into a sham loan agreement with the Convention Center Authority in an attempt to tie the hands of incoming commissioners. This is expressly prohibited by state law.

    • A Convention Center Authority attorney drafted the trust indenture in material breach of requirements of a county enabling ordinance, thus omitting essential taxpayer protections.

    • Both County and Authority witnesses' testimony indicated the project will be unlikely to meet debt service and operating expenses.

    • Therefore, county commissioners will face the choice of either raising taxes or allowing convention center to sit idle.

    • The County guaranty does not cover an additional $14 million in bonds sought for the convention center to proceed. The county is required to approve "any" changes to the agreement and has not done so.

    • Interest on the premature Convention Authority loan costs $18,000 per month. Interest and professional fees for the unnecessary loan have amounted to over $1 million to date.

Convention Authority Pays $250,000
Monthly While Ignoring Calls for
Investigation of Spending

The $17 million of public funds spent to date by the Authority could have accomplished all of the following:.
    • Enlarged and renovated the Duke Street Library
    • Restored the Brunswick Hotel to its original 4-star status
    • Renovated 300 city row houses