Lancaster, Pennsylvania
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•Since late in 2000, the estimated cost of the Lancaster County Convention Center project has increased from $70 million to $145 million [including the proposed parking garage], and yet not one bid has been opened. Not one study has been completed that addresses economic feasibility and estimates cash flow from the center project. Since Sept. 11, 2001, the group-travel and convention market has changed significantly, making markets like Lancaster County less attractive. Why should anyone care about this? Both Lancaster County and the city have guaranteed millions of dollars on bond issues, and the economic feasibility of this project is crucial for taxpayers. But what about several reports that the Lancaster County Convention Authority commissioned previously? Not one addresses the economic feasibility of the project. The report that the authority refers to most frequently in support of the project is one done for the trial on the hotel-tax challenge in December 2000. That report, really a market study, was done by PricewaterhouseCoopers. After trial, the PricewaterhouseCoopers market report was quoted numerous times by the authority and there was a link to it on the authority Web site. Nothing seemed amiss about the use of the market report until last year, when the firm requested that the Web site link to the report be removed because: •The agreement between PricewaterhouseCoopers and the authority required the firm’s written consent to use the report in any publication, press release, etc., and none was obtained by the authority; and •Consent could not be given because the project has changed significantly and the report is no longer reliable. Despite these limitations, the authority has admitted using the market report as a substitute for an economic-feasibility study to support grant applications submitted to the Commonwealth and bond guarantees presented to the commissioners, and to obtain financing and other public support. This raises three questions: •If the report is background, unimportant, out-of-date and unreliable, how many have been misled into thinking it is reliable? •Why was the authority using it when it was convenient to do so? •Why has the authority mischaracterized the report as an economic-feasibility study? If the authority had to borrow funds from a bank and its application for the loan had been pending for some time, it would be required to update that application with current information. What economic analysis does the authority have to support its applications for the $15-million capital-development grant from the state or for the Act 23 grants from the Department of Community and Economic Development? How can it say, with any confidence that this project is going to succeed? What is the impact on the marketability of the bonds if the project is not economically sustainable? What comfort do Lancaster County and city have that they will not be reaching into tax dollars because the bond obligations cannot be met? As of Feb. 15, the commissioners approved the engagement of Pannell, Kerr and Forster, a nationally respected hospitality firm, to generate the first economic feasibility study done for this convention center/hotel project. This PKF report will analyze the current economic viability and/or the associated economic risk of this disputed project. Unfortunately, as of this date, Penn Square Partners, the private developer of the hotel has refused to participate with PKF in this study and the authority has not yet said whether it will participate. As a new member of the authority, I do not want this project to fail. However, more importantly, I do not want the county and the city to be funding, via bond guarantees, a project that lacks current data to support its viability. That would mean that not only will the hotel owner pay more through a higher hotel tax, but the taxpayers will be asked to step in via higher real-estate taxes to fund the guarantees created by the shortfalls. Jack Craver Lancaster County Convention Center Authority Link to original article: http://lookingatlancaster.blogspot.com/2006/02/letter-to-editor-by-jack-craver.html |
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