Economic Development or Corporate Welfare? Part Two

I apologize to all that I haven’t posted much here since I wrote the original article about the proposed publicly-funded hotel and convention center in Lancaster, PA back on January 7th. A lot has happened since then, and I’ve been spending a lot of time researching, writing emails and messages, plus attending (and speaking out) at public meetings, all in opposition of this project.

A brief review: In 1997, a group of businessmen proposed that a publicly funded convention center be built around an empty downtown department store, to be accompanied with a privately-funded luxury hotel (in an area that currently has only one run-down hotel). The original plan released in 1999 was for a $30 million convention center, to be built alongside a $45 million privately funded hotel. Since then, the total estimate cost of the project has escalated to over $129 million, all of which is either directly or indirectly funded by tax dollars!

On January 17th, the Brookings Institution released a report by Dr. Heywood Sanders titled “Space Available: The Realities of Convention Centers as Economic Development Strategy”. You can download this half-megabyte PDF file here. If you have any interest in convention centers, this report is excellent reading. The release of this report was quickly followed by a large number of local television and newspaper interviews of those responsible for this project, all of which claimed this report didn’t apply to Lancaster.

I had the opportunity to hear Dr. Sanders speak on March 3rd at a public presentation sponsored by the Greater Lancaster Hotel and Motel Association. After his presentation, Dr. Sanders was asked if official denial was the usual response to this kind of report; he laughed, then said he hears claims of “our city is unique” from practically every city that is planning to build or expand a convention center or associated hotel. I have verified this by searching news articles on the Internet.

What has opened up this issue for further debate is the hotel developer’s recent demands that (1) the Lancaster Redevelopment Authority take ownership of (and responsibility for) the hotel for 20 years, after which they will GIVE it to the private developer (Penn Square Partners), and (2) the hotel is forgiven its city, county, and school district taxes for 20 years, so it can qualify for Pennsylvania Tax Increment Financing. In exchange, the Penn Square Partners has promised large sums in lieu of taxes ONCE THEY HAVE MADE THEIR DEBT PAYMENTS. This introduces a real probability that the local taxing bodies will receive nothing. This is really the first time the public has had a chance to comment on the project, and the floodgates have opened. Of course, those behind this project have started a massive DISinformation campaign, basically telling lies about the facts their opposition is pointing out.

Today, in response to the Penn Square Partners’ request of immediate approval of the TIF, two of the three County Commissioners released a list of 57 specific questions they expect answered before they will vote on the proposal. This list includes questions about a $40 million bond issue in 2003 by the then County Commissioners (only one of which was re-elected), on which county taxpayers have already spent $700,000 in fees, and which cannot be used for Convention Center construction unless converted into tax-free notes. There are also questions about many of the financial projections that the PSP has been quoting, and more questions about how over $7 million in funds already distributed have been spent. Their list of questions is available here, and is very interesting to read. There is also an overview article here. Please note that Lancaster Newspapers is a minority partner in the proposed hotel project.

Forbes Magazine recently published an excellent article about convention centers here and here. A local activist has posted several articles at his web site, the column on the left (in red) links to past articles. If you want to read what the other side has to say, visit Penn Square Partners and the Lancaster County Convention Center Authority. If you are interested in any more information, or just want to discuss this subject, please feel free to email me.

To be continued…

Artie See

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