Convention Center Hotel turns to BLACKMAIL…

Since my last post about this subject on March 16th, a LOT has happened, especially today. Since this is still developing as I write, I’ll try to summarize as best as I can. The latest information is in part from WGAL-TV, both on the Internet and broadcast, and from Lancaster Newspapers (which owns a share of Penn Square Partners, the “developer” of the proposed convention center hotel in downtown Lancaster, PA.

Penn Square Partners had continued their charade that the project was dead, however at the same time they were negotiating behind-the-scenes with the finance director of the School District of Lancaster. Earlier this week, Penn Square Partners had announced that they would accept the compromise proposal, if the School Board would approve it.

Meanwhile, two of the three County Commissioners (Republican Dick Shellenberger taking the lead, with the agreement of Democrat Molly Henderson) posed 57 questions to both the Penn Square Partners, and the Lancaster County Convention Center Authority. These questions include the mishandling of a $40 million bond issue made by the county for construction of the convention center, of which nearly $9 million in unaccounted for. The LCCCA made an attempt to answer some of the questions, however the Penn Square Partners did everything they could to avoid responding. It all came to a head this past Thursday, at a meeting attended by Republican State Senator Gibson E. Armstrong, Democratic State Representative Mike Sturla, Republican Mayor Charlie Smithgall, Republican County Commissioner Chairman Dick Shellenberger, County Treasurer Craig Ebersole, Penn Square Partners President Nevin Cooley, and Penn Square Partners Vice President Mark Fitzgerald. Dick Shellenberger demanded the answers to all of the 57 questions; after answering a few, Nevin Cooley stated that the answers to any more questions could leave the Penn Square Partners open to a new lawsuit.

Fast-forward to today: Mayor Charlie Smithgall, with Gib Armstrong, Mike Sturla, Redevelopment Authority Chairman Charles Simms, and Republican City Council President Dr. Stephen G. Diamantoni, announced that Lancaster City would purchase the existing buildings and land for $6.8 million, and take it completely off of the tax rolls (PSP paid $1.25 million for the building in 1998, and has made NO repairs since then). Penn Square Partners would then lease the building from the city for an undisclosed amount, build the hotel, then at the end of 20 years PSP would have the option of purchasing the building from the city for an undisclosed amount. There is no word as to where Lancaster City would obtain the funds to purchase this building, in fact the City government is already operating at a deficit.

PSP announced that it would provide Lancaster City with $250,000 each year for 20 years, with payments to increase if the hotel exceeds a 12% profit after debt payments and expenses. The Lancaster County government, which is still demanding answers, will receive NOTHING. It would be up to Lancaster City to decide how much money to compensate the School District of Lancaster, but it was hinted that it would be the $200,000/year that the School Board had initially turned down. WGAL interviewed County Commissioner Dick Shellenberger and School Board member Michael Winterstein, as well as School Board Finance Director Curt Baker; all expressed shock and dismay at this turn of events.

Now here is the first part of the blackmail: the School District was told they will receive *NO* money if they oppose this new plan. Indeed, School Board members are already discussing legal action against the city.

All parties are aware that this arrangement opens up the possibility of multiple lawsuits, especially from the group of hotel operators who had originally argued against the hotel tax that is funding much of this project (and who only gave up when the LCCCA threatened to sue them for harassment!). The second part of the blackmail is this: State Representative Mike Sturla said on-camera that ANY money needed to fight ANY lawsuits would come directly from the funds that otherwise would go to Lancaster City and the School District. This is blackmail, plain and simple: our own public officials are holding the students of Lancaster City and Township hostage to guarantee that the Penn Square Partners never have to reveal what they are doing with OUR tax money.

Lancaster City Council will hold the first reading of the bill authorizing this action tonight, and vote on it two weeks from now. Since most of the City Council members are directly under the control of Charlie Smithgall, that it will pass is a foregone conclusion.

In my opinion, the fact that the Penn Square Partners are refusing to reveal how they have been handling taxpayers funds indicates a real possibility of wrongdoing. Nevin Cooley has even admitted that the information they are concealing will open them to legal action. I am amazed that the Lancaster County District Attorney and the State Attorney General are letting them get away with this.

There are several more meetings of public officials scheduled this week about this subject, so we definitely haven’t heard the last of it.

-Artie See

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