NewsLanc.Com

    Providing Greater Lancaster with an Alternative Source for Local News and Commentary  _________________________________________________________
  October 17, 2006                                         Publisher: NewsLanc.com LLC                                   Volume 1, Number 11
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Court Testimony: $40 Million
Trust Indenture Violated
County Ordinance by Omitting
Taxpayer Protections


Court testimony asserted that attorney Peter Edelman of Stevens & Lee, who represented the Lancaster County Convention Center Authority (LCCCA), omitted pivotal taxpayer protections required by the county enabling Ordinance 73 when he drafted the Trust Indenture for $40 million in bonds. Contrary to Ordinance 73, the Trust Indenture does not:
    require the Authority to provide proof of "sufficient funds" to complete the project,
    "certify" the accuracy of the budget,
    require the Authority to certify sufficient funding to complete the project when the Authority requests the Trustee to disburse funds on deposit in the construction fund.
Since the Authority has no taxing capability, a funding gap estimated as much as $27 million and deficits of millions per year would have to be met either by additional taxes and / or borrowings guaranteed by city and county taxpayers.
District Attorney Rejects Request to Investigate
$6 Million in LCCCA Billings


In a letter to Convention Center Authority board member Laura Douglas, County District Attorney Donald Totaro rejected a request by Douglas and fellow board members Jack Craver and Deb Hall to investigate the Authority's payments to the law firm of Stevens & Lee.

The only information provided in over 200 invoices from the law firm was "For professional services rendered."

Totaro stated Douglas, Craver and Hall made no specific charges of criminality as the basis of their request and claimed "the FBI in Harrisburg has looked into this situation, and they have not found any evidence of criminal activity."

Douglas, in an interview with NewsLanc.com, responded: "Until [Authority] Chairman Darcus will permit board discussion of means to verify the legitimacy of the over $6 million in Stevens & Lee billings to date, there is no way to generate specific allegations of criminal misconduct, even if that is the case.

"We have no reason to believe that the FBI has sought and reviewed the Stevens & Lee billings. So I hope that Mr. Totaro is not using the FBI as an excuse for inaction."

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Convention Center/Hotel Project Timeline

1992 The historic 115 year old Watt & Shand department store is purchased by the Bon Ton Corp. Three years later the store is closed.
1995-7 Harrisburg Area Community College (HACC) plans to move into Watt & Shand and establish a downtown satellite campus. Republican Mayor-elect Charlie Smithgall promises to block any attempt to help provide parking and the HACC deal collapses.

1997 Penn Square Partners (PSP) High Industries, Lancaster Newspapers, Inc., Fulton Bank -- offer $1.25 million for the Watt & Shand property. PSP take ownership Feb. 1998.

1998 The 'Winterbottom Report' recommends establishment of a 40,000-50,000 square foot "Conference Center." (Not a convention center / hotel.) Estimated Project Cost: $7 million.

1999 A "Convention Center Task Force" suggests converting Watt & Shand into a hotel designed to support a convention center: Estimated Project cost: $75 million

2000 A marketing study by the firm PricewaterhouseCoopers (PwC) notes disadvantages of the downtown location, including lack of air and road access, and few downtown entertainment venues. Study unavailable to public and officials and is touted as favoring the project. PwC in 2006 withdraws report.

2003 Architects are instructed to redesign the project "in order to reduce the overall project cost." Instead, the project quadruples in size. Estimated Project cost: $129 million.

2003 In December, outgoing board of commissioners sign a guaranty for half of a $40 million construction bond (plus interest) for the project. It is later discovered that the agreement between the county and Lancaster County Convention Center Authority (LCCCA) does not include taxpayer protection required by the enabling county ordinance.

2005 A Brookings Institution study concludes convention centers rarely generate promised economic development and usually become huge drains on local taxpayers. Officials scramble to provide additional funding. Estimated Project cost: $138 million.

2005 Fox43 TV/Opinion Dynamics poll of county residents shows 78% with an opinion oppose taxpayer guarantees for the project.

2006 Pannell, Kerr, Forster (PKF) a nationally recognized consulting firm conducts the first ever true Feasibility Study on the project for county. Concludes: "We therefore recommend that, prior to proceeding further with this project, the parties consider downsizing of the project or an alternate use for the site."

2006 In early August, Sponsors introduce a plan to allegedly deal with the more than $20 million funding gap.

2006 The LCCCA, PSP, and Redevelopment Authority of the City of Lancaster (RACL) sue Commissioners Shellenberger and Henderson asking the court to impose a permanent injunction to prevent challenging the validity of the county guaranty. Among the revelations at the hearing: the bond counsel for the LCCCA omitted key taxpayer protections from the Trust Indenture that were included in the enabling County ordinance; and the monopoly Lancaster Newspapers, Inc. holds a 44% ownership stake in the project.

2006 Court testimony sets budget gap at $27 million. Estimated Project Cost: $160+ million.

2006 Three LCCCA board members request county district attorney investigate over $6 million in billings from the law firm of Stevens & Lee.

Additional information at www.lancasterfirst.org/Project_Overview.htm