Pennsylvania Dutch Country Visitors Center 501 Greenfield Road, Lancaster, PA 17601 717-299-8901 www.padutchcountry.com
Convention Center debt levels will result in loss of CVB funding in April 2012
December 9, 2011
Sadly, that day is on the horizon. Though the convention center is performing well, unanticipated energy costs in combination with economic woes not seen since the Great Depression have negatively impacted hotel tax revenue received by the Convention Center. The result will be the triggering of the default mechanism in April 2012. Specifically: our 20% of the 3.9% tax will be diverted in its entirety until the debt is satisfied.
Since 2007 we have considered worst-case financial scenarios (as part of any good business plan assessing any potential threats) and this was one of them. Yesterday, our board approved the 2012 budget, at the same marketing and service levels as in 2011, and with an infusion of $1.2 million from our unrestricted reserve fund to make up for the projected loss of tax revenue we will receive from April through the end of the year, as well as the loss in state funding all CVBs throughout Pennsylvania have suffered. Our existing reserve fund could conceivably carry us through 2013 at current marketing levels.
Cutting back on our marketing efforts would be hugely detrimental to our members and our industry. The resulting loss of overnight stays would translate to a further drop in hotel tax revenue, creating a vicious circle, so it’s imperative that we maintain our marketing efforts at existing levels.
While it’s conceivable that the Convention Center debt will be satisfied prior to the end of 2012, it’s highly unlikely, and we therefore felt it prudent to budget zero room tax dollars, April through December. We will continue to receive 100% of the 1.1% excise tax, which will equate to about $1,341,000 in 2012 and is dedicated solely to the CVB for tourism marketing according to the county ordinance.
At yesterday’s PA Dutch CVB Board meeting, the creation of two task forces was recommended and approved. The first of these will focus on a long-term funding sustainability solution for the CVB while the other will work to advance a solution to the funding challenges created by the LCCCA’s inability to meet its debt service obligations.
There is significant support for our CVB and an understanding of the crucial role we play in this county’s economy from key stakeholders including Penn Square Partners, the Lancaster County Convention Center Authority (LCCCA), the Lancaster County Commissioners and bond-holder Wells Fargo bank. Working with each of these partners to devise a long-term solution will be essential.
Please feel free to contact me with any thoughts or questions. I would welcome the opportunity to talk with you. More information will be shared with you as it is available.
Thank you for your ongoing support and for playing an important role in making Lancaster County’s tourism product one we can all be proud of.
- Chris
Chris Barrett, President & CEO
PA Dutch Convention & Visitors Bureau
501 Greenfield Road | Lancaster, PA 17601
(phone) 717-391-6001 | (fax) 717-299-0470
cbarrett@padutchcountry.com | www.padutchcountry.co
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