An independent feasibility study of a convention center project to be funded largely by taxpayers in Lancaster, Pennsylvania concluded the project “should be downsized or an alternate use for the site” should be found. The study projected an annual deficit of up to $4.8 million even after public subsidies.
Lancaster County officials ordered the study in 2006, nearly seven years after the project was proposed, and after seeing the project more than double in size to $175 million from $75 million–and go from largely private financing to mostly public financing.
Market Problems Nationally
A report published in 2005 by The Brookings Institution underscores the problems of the convention center market nationally.
“While the supply of exhibit space in the United States has expanded steadily, the demand for convention and tradeshow exhibit space has actually plummeted,” wrote Heywood Sanders, author of “Space Available: The Realities of Convention Centers as Economic Development Strategy.”
The man responsible for collecting a Lancaster-area hotel room tax, 80 percent of which would go to help fund the convention center, is Lancaster County Treasurer Craig Ebersole. Ebersole expressed concern about the bottom line.
“If there is a funding gap between revenues, debt service, and operating expenses,” Ebersole said, “the first monies in play would be the portions of the lodging tax currently paid to the Pennsylvania Dutch Visitors Bureau for promoting the convention center.
“If this happens,” Ebersole continued, “and marketing money is used to simply pay light and heating bills, a slippery slope could quickly become a downward spiral. Thus the County Government Tax Fund would be in play in this scenario.”
Other project critics include former Lancaster City Controller Robert “RB” Campbell, who refused to sign convention center papers on behalf of the city because of questions about city financing.
“I am concerned that the taxpayers of the city are being unfairly burdened with the majority of the financial risk, with very little risk to the private partners,” Campbell said.
“Frankly, it appears to be a scheme to shelter the owner of the proposed hotel from having to pay their fair share of property taxes and various fees to the city, and it may be illegal,” Campbell concluded.
— Christiaan A. Hart Nibbrig
For more information …
“Space Available: The Realities of Convention Centers as Economic Development Strategy,” by Heywood Sanders, http://www.brookings.edu/metro/pubs/20050117_conventioncenters.htm