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After multiple delays, funding agreement still pending for Lancaster County Convention Center

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The $178 million Lancaster County Convention Center and Lancaster Marriott at Penn Square opened in 2009.
The $178 million Lancaster County Convention Center and Lancaster Marriott at Penn Square opened in 2009. - (Photo / )

When Lancaster County Commissioner Scott Martin unveiled the convention center funding proposal in September, he expressed hope that it could be enacted by the beginning of January.

That didn't happen.

However, parties involved say that despite the protracted process, they're still hopeful Martin eventually will be able to negotiate an agreement that will put the long-contentious issue to rest for a while.

Where things stand

The Lancaster County Convention Center Authority voted unanimously in favor of the plan, Martin announced toward the end of October, and the Pennsylvania Dutch Convention & Visitors Bureau reported doing the same in mid-November. However, the pieces didn't all fall into place, and by Feb. 24 the visitors bureau felt the need to write its fellow stakeholders and reiterate support for the original proposal in light of what it called "the suggestion and informal consideration of an alternative collaborative agreement."

"While significantly extending the timeframe of the agreement, after the first seven years, it would inevitably rely on only one funding source — the hotel room rental tax — rather than continuing the shared funding arrangement of the original September proposal," the letter said of that alternative. However, no one would talk about the alternative plan.

Kathleen Frankford, president of the visitors bureau, said its normal share of the hotel room tax is about $1 million a year — money that ultimately is vital for the promotion the bureau does for its more than 700 members across the county.

"Most of those people rely on us to do their marketing for them," she said. "Our efforts are critical to maintaining the economy in the county."

Martin, the bank and Penn Square Partners would not comment on where negotiations stand. Kevin Molloy, LCCCA executive director, said his understanding is that Wells Fargo Bank is the partner Martin needs to hear from.

"I still remain optimistic that this is going to be resolved," said Lancaster Mayor Rick Gray, praising Martin's efforts and noting that with December's awarding of a City Revitalization and Improvement Zone program to Lancaster, the city stands ready to fulfill its part of the plan. He said he believes the deal remains substantively the same as in September and that there's a possibility Martin might be able to negotiate a better deal with the bank.

"Lancaster continues to flourish," Gray said. "This (the convention center) is a part of it, and we want to make sure that it continues to be a part of it. It's not the only thing that's happening in Lancaster, but it's certainly an important thing."

Developing exigency

The convention center opened in downtown Lancaster in 2009. The integrated $178 million facility includes both the convention center proper, which is a publicly owned entity under the direction of LCCCA, and The Lancaster Marriott at Penn Square, which is owned by the Redevelopment Authority of the City of Lancaster and leased to Penn Square Partners, the private company that holds the Marriott franchise.

Wells Fargo holds about $64 million in bonds on the center, and the LCCCA was supposed to be able to cover expenses, including the bond interest payments, with the help of its share of the county's 3.9 percent hotel room tax.

However, revenue came in below projections and the LCCCA's reserves fell below mandated minimums. In 2012, it began receiving PDCVB's share of the hotel room tax which, following a three-month reversion last year, it is still receiving.

That situation didn't make the visitors bureau happy, particularly as the LCCCA was still struggling and the idea of hiking the hotel room tax was raised. And then the situation got more fraught when Wells Fargo was due to adjust the interest rates early last year.

Concessions all around

All that set the stage for serious negotiations led by Martin. Wells Fargo extended its deadline, and in September Martin unveiled a plan he said had been almost a year in the making. Its hallmark was concessions all around, requiring a seven-year commitment from the city, Penn Square Partners and the LCCCA and five-year participation from the bank and PDCVB.

If everyone signed on, the plan was for the commissioners to vote on increasing the county's backing of the bonds from $20 million to the full $64 million and for the bank to give LCCCA an interest rate reduction totaling $4 million over the five years.

The plan would, Martin said, put the LCCCA on solid footing, give it the funds needed for furniture, fixtures and equipment, and marketing big events — and do all that without raising the hotel tax. However, it did call for the visitors bureau to get its share back only after 24 months and only if LCCCA's reserves were then at least $6 million.

Key events in the history of the convention center

1997 — Community leaders hire a consultant to create a plan to stimulate the economic revitalization of the City of Lancaster.

1998 — Leaders from High Companies, Lancaster Newspapers and Fulton Bank agree to partner in buying the former Watt & Shand Building. A Convention Center Task Force is formed.

1999 — Lancaster County Convention Center Authority is formed, and a new hotel room rental and excise tax is authorized to allow for funding a convention center.

2000 — The tax goes into effect and hoteliers file the first of several lawsuits challenging it, which in effect puts the project on hold for three-and-a-half years until the hoteliers lose.

2007 — Fulton Bank leaves the partnership, now known as Penn Square Partners.

2009 — The integrated $178 million facility opens. The Lancaster Marriott at Penn Square, with 299 rooms, is owned by the Redevelopment Authority of the City of Lancaster and leased to PSP. The Lancaster County Convention Center, which can hold events for up to 5,000 people, is run by the LCCCA.

2012 — LCCCA’s reserves fall below the requirement and in April it begins receiving the Pennsylvania Dutch Convention and Visitors Bureau’s 20 percent of the tax; the other 80 percent has always gone to LCCCA.

2013 — PDCVB gets its 20 percent share of the tax for three months, then in April it goes back to LCCCA. In September, County Commissioner Scott Martin announces a plan that would require concessions on all sides and five- or seven-year commitments from all parties.

Sources: www.pennsquarepartners.com, www.lccca.com and Business Journal records

Write to the Editorial Department at editorial@cpbj.com

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