News Column

Commissioner has concerns over convention center finance plan

June 5, 2014

By Joe Hainthaler, Intelligencer Journal/Lancaster New Era, Pa.

June 05--Still awaiting approval from key players, the Lancaster County Convention Center financing plan drafted by Commissioner Scott Martin drew a high-level opponent Wednesday morning.

While "I support the convention center project and believe it's a positive for the county" and the city, Commissioner Craig Lehman said, "I have concerns about Commissioner Martin's proposal as I understand it."

Martin, who is in Washington this week for a four-day program by the County Leadership Institute, expressed surprise.

"I think he needs to understand it better," Martin said of Lehman, who made his comments during the commissioners' regular Wednesday meeting.

As Lehman understands it, Martin's proposal would put county taxpayers on the hook for more than tripling the county's guarantee of the convention center's debt for the life of the loans in exchange for five years of financing. The bonds on the convention center expire in 2047.

That, Lehman said, "is not acceptable from my perspective."

Learning of Lehman's opposition, Mayor Rick Gray said, "Anybody that supports the city and supports the tourism industry, I don't see how they could be against it at this point."

Martin's proposal would have the county guarantee all of the convention center's $63 million debt, up from the current $20 million guaranteed by the county. Wells Fargo is the sole holder of the center's construction bonds.

In exchange for the county guarantee, Martin said, Wells Fargo will cut interest costs by 105 basis points - to 75 from 180 - over five years for a total savings of $3.3 million.

Before even considering a guarantee of the remaining bonds, Martin is calling on the other five parties involved in the center to participate in a collaboration agreement requiring contributions by all five.

Those parties are Lancaster city, Penn Square Partners, the Lancaster County Convention Center Authority, the Pennsylvania Dutch Convention & Visitors Bureau and Wells Fargo.

The proposal has been signed by the city and the visitors bureau. Wells Fargo is awaiting the county guarantee.

And the center authority and Penn Square Partners are still negotiating.

The center authority's board is scheduled to meet Friday to consider Martin's proposal and a side agreement with Penn Square Partners.

Martin - who has been working for two years to negotiate this financing plan - said the collaboration agreement would have no impact on county property taxpayers.

The county's hotel room tax, he said, averages about twice the $170,000 per month currently being paid in principal and interest on the convention center's debt.

"That tax would have to collapse by more than half for that to be a problem," Martin said.

And that's why, Martin said, his proposal would continue to require putting revenue from the hotel room tax first toward the payment of principal and interest on the center's debt.

"Unless the state Legislature decides to eliminate the county hotel tax," Martin said, "it's always going to be heads in beds that's going to pay that."

Commissioners Chairman Dennis Stuckey, who was present when Lehman expressed his concerns, was puzzled by Lehman's timing.

"I was a little surprised," he said, "that statements (about the convention center proposal) were made this morning, in Commissioner Martin's absence," given that the soonest the proposal could come up for a vote is June 18.

Martin said May 23 that, provided all parties have agreed by then, he will advertise for the board of commissioners to consider his proposal to guarantee the debt at its June 18 meeting.

Given Lehman's opposition, does Martin's proposal have a chance of being passed by the county's three-member board of commissioners?

Stuckey said he still needs to review the details before saying how he'll vote, but he does not share Lehman's particular concern.

"Commissioner Martin has worked very hard on this proposal, and, from what I understand of it, he has done a good job of protecting the taxpayer," Stuckey said.

Penn Square Partners consists of general partner Penn Square General LP, a High Real Estate Group LLC affiliate, and limited partner Penn Square Ltd., LLC, an affiliate of Lancaster Newspapers, Inc., publisher of the Intelligencer Journal/Lancaster New Era and Sunday News.


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Source: Intelligencer Journal/Lancaster New Era (PA)

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