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Lancaster mayor still hopeful on convention center plan

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Despite an impending deadline and a second party yesterday saying no to a financing plan for the Lancaster County Convention Center, Lancaster City Mayor Rick Gray says he's still "very optimistic" that an agreement will be reached.

Unless an agreement is reached or bondholder Wells Fargo extends its deadline again, the convention center debt is set to go into default at 5 p.m. July 1, triggering a 10 percent interest rate on nearly $64 million in bonds.

Lancaster County Commissioner Scott F. Martin, who has been leading the negotiations but is reportedly on vacation, said last week the annual payment on the debt would then be more than $6 million.

The hotel tax didn't raise that much money even during a good spell last year, Martin said, and so through its existing partial guarantee on the bond, the county would be on the hook for at least $1.3 million a year if the debt goes into default.

"It’s my argument that if everybody understands it and the ramifications of it, they’ll get on board," Gray said Wednesday afternoon. "I know Penn Square Partners isn't, but I think everybody else, once they closely examine it, will get on board."

Negotiations have lasted about two years, with a goal of getting all of the many parties on board. Several weeks ago, all other parties had signed on when Penn Square Partners announced that it was making release of its signed approval contingent on Lancaster County Convention Center Authority’s approving two side agreements that would have lasted the remaining 95 years of the convention center's lease.

LCCCA did not take action on the side agreements, a decision Martin supported, which triggered the announcement last week that the plan would proceed minus PSP — and then the Pennsylvania Dutch Convention & Visitors Bureau announcement yesterday that it had voted not to support the plan.

"The support of the bureau has always been based on an agreement that shares the contributions needed for the LCCCA’s financial stability among all stakeholders," PDCVB President Kathleen Frankford said in a statement. "This crucial aspect is now absent from the current proposal."

The current provisions of the relevant county ordinance will remain in effect in the meantime, meaning the PDCVB's 20 percent portion of the 3.9 percent hotel room rental tax will continue to be diverted to the LCCCA when its fund balances do not meet the minimum required levels. This provision has been in effect for all but three months since February 2012.

"Until push comes to shove, until it’s obvious that this is the final point, a lot of negotiations aren’t culminated and concluded," Gray said. "I think we’re getting to that point."

Martin has said Wells Fargo signaled an unwillingness to venture further extensions. If all parties signed on, he planned to put it to vote by the commissioners at their scheduled meeting on July 1.

"I don’t think it’ll go into default," Gray said. "It certainly wouldn’t be good for the city or the county or the tourism industry, and that’s needless to say."

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.

Editor's note: This story has been modified from its original version to clarify Penn Square Partners' role in and requests for joining Commissioner Martin's plan.

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Write to the Editorial Department at editorial@cpbj.com

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