Penn Square Partners wouldn't sign onto the Lancaster County Convention Center financing plan without side agreements that the other parties objected to — so in extremity, the other parties are planning to proceed without PSP.
Lancaster County Commissioner Scott F. Martin had given the parties a June 11 deadline to sign on and said previously that was his final offer. However, he said in a news conference today that bondholder Wells Fargo sent a letter June 14 outlining what would happen in event of a default, which would be triggered at the beginning of July in the absence of an agreement.
The default interest rate on the nearly $64 million in bonds would be 10 percent, Martin said, meaning that the annual payment would be more than $6 million. The hotel tax didn't raise that much money even during a good spell last year, he said, and so through its existing partial guarantee on the bond, the county would have been on the hook for at least $1.3 million a year.
The other public parties in the situation would have also been in losing positions in the event of a default, Martin said. However, he said, the side 95-year agreements that PSP was demanding of the Lancaster County Convention Center Authority were out of the question.
"That's just not a good public budgeting process," Martin said.
The biggest change with PSP out of the picture, Martin said, was the $50,000 in debt it was supposed to forgive the LCCCA annually. Minus the PSP part, the rest of the agreement is expected to be ratified by the other public parties as it stands, and then he plans to put it to the commissioners for a vote during their meeting at 10 a.m. July 1 — an arrangement Wells Fargo has agreed to, Martin said.
The agreement will now have the county guaranteeing all of the debt — but, Martin said, as the proposal stands, the county would not be liable unless there was a default or the county hotel tax revenues collapsed by more than half, which is historically extremely unlikely.
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.