Tuesday, September 2, 2008

Philadelphia Inquirer spotlights CC and High self dealing

On Sept. 2, the Philadelphia Inquirer ran a front page expose' concerning the Lancaster Convention Center. It can be read at this link.

It astutely observes: "High Real Estate Group is the hotel-convention center developer. High Construction Co. has the general-trades contract for the interior and finish work. High Concrete Structures Inc. handled the precast concrete on the job. High was low bidder, or the only bidder, on those jobs."

The Inquirer relates: "High and the newspapers formed Penn Square Partners and are investing $11 million in equity to build the hotel. Initial construction estimates in 1999 were for a $45 million private hotel and a $30 million publicly funded convention center. But in 2003, the project changed; the hotel and convention center were no longer separate buildings. It became one structure, with a single heating and cooling system and one kitchen. The center grew in size from 61,000 to 220,000 square feet."

Lancaster mayor Rick Gray is quoted as saying "County taxpayers are on the hook for next to nothing." Not so. But, more importantly, what is missed by the article and not said by Gray is that Lancaster City taxpayers are on the "hook" for almost the entire mortgage of the High / Lancaster Newspapers' hotel. If the hotel fails to cover its huge expenses, as many observers and the prestigious PKF Consultants predict, it will greatly impact the financial viability of the City for a decade to come and its very presence will retard downtown gentrification and economic growth.

A questionable observation of the article is that "High and the newspapers formed Penn Square Partners and are investing $11 million in equity to build the hotel." Only a modest share of the ballyhooed $11 million appears to be in up front cash.

The article accurately observes: "While supporters see the convention center as a catalyst to spur growth, the city's renaissance really began in the 1990s, said pharmacist and former mayor Charles Smithgall. Lancaster has a new minor-league baseball stadium, burgeoning art galleries, and the Pennsylvania Academy of Arts. Housing prices have shot up; new restaurants have come to town."

It is a shame that state wide attention is only being directed at the controversial convention center project now that it is too late to thwart it. Nevertheless, coverage at least sheds a light on what may be the most sordid, possibly corrupt, and self profiting event in the county's history.