Working Together for the future of Lancaster, Pennsylvania

Hotel/Convention Center Project on Life Support;
Even Re-Bids Come In $20 Million Over Budget

In a stunning and apparently fatal setback for project developers, re-bids for construction of the downtown hotel and convention center came in more than $20 million over budget. Penn Square Partners, the business partnership behind the center, conceded the overage will probably kill the proposed development.

"While we have reduced the gap between the estimated cost to build the project and the available funds to approximately $20 million by value engineering and re-bidding several major project construction components, we regret deeply that the remaining gap is most likely too great to fill," Nevin Cooley, President of Penn Square General Corporation wrote in a prepared statement.

Even if the bids had been close to the $139 million budget estimate for the cost of the project, there were substantial financial hurdles the developers needed to clear before the controversial project could be built, including:

  • The ruling by County Judge Madenspacher that "substantial legal questions" remain about the legality of the County's partial guaranty of the Convention Center Authority's $40 million loan.

  • The inability to release the $15 million state grant to the Authority due to ongoing litigation challenging the hotel tax by Ephrata Motel Partners and prominent local businessman Clyde Horst, owner of Horst Hotels Co.

  • Penn Square Partners' failure to provide the promised bank letters of credit to back the proposed $24 million Redevelopment Authority of the City of Lancaster (RACL) lease revenue bond.

  • The unwillingness of Lancaster City Council to increase a second RACL bond from $12 million to $14 million, in part due a Uniformity Clause lawsuit pending in Commonwealth Court.

    Over the past year, citizens and numerous political leaders, including much of the County's state legislative delegation, the County Treasurer, the former City Controller, the City School Board, and County Commissioners Shellenberger and Henderson had raised serious questions concerning the convention center proposal and ever increasing public risk.

    Upon hearing Penn Square Partners' announcement, Lancaster County Commissioner Dick Shellenberger said: "Now the community can come together and support a project that will revitalize the City in a way that makes sense for the entire community, and that will not require excessive taxpayer risk. The County Commissioners look forward to being a part of Lancaster's community dialogue to continue the City's healthy revitalization."

    • updated July 27, 2006 at 7:00 AM

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