LCCC Impact & Recovery

 Overview 

 

The Pennsylvania Dutch Convention & Visitors Bureau (PA Dutch CVB) is leading a community-based effort to address the current funding challenges faced by the Lancaster County Convention Center Authority (LCCCA), and the resulting implications for the CVB’s marketing efforts on behalf of its members and Lancaster County as a tourism destination.

 

Ever since the ordinance enabling the hotel tax was crafted in 2000 in response to the anticipated opening of the Convention Center, we have known that the portion of the tax (20% of the 3.9% room tax) going to the CVB would be diverted if the Convention Center debt requirements were not satisfied by specific dates in the financing agreements.

 

That day is now on the horizon. Despite Lancaster’s competitive performance in hotel occupancy versus similar destinations in the last few years, economic woes not seen since the Great Depression have negatively impacted the hotel tax revenue received by the LCCCA to service its existing bond debt. This shortfall has been further magnified by the bond’s original tax revenue forecasts, which were built on pro-forma projections that have ultimately proven unattainable.

 

To make up for this shortfall, the authority’s debt reserves have been drawn down until they are now on the verge of falling below a minimum threshold set by the financing agreements. The result will be the triggering of the default mechanism in April 2012. Specifically, the CVB’s 20% of the 3.9% hotel room tax will be diverted in its entirety until the minimum reserve threshold is once again met. This diversion could total approximately $797,000 in 2012 alone.

 

The PA Dutch CVB, at the board’s direction, has convened a Lancaster County Convention Center Fiscal Impact and Recovery Task Force to identify the full scope of the financial shortfall in the most transparent way possible and then provide recommendations to the community for a long-term solution. The effort is being led by Al Duncan, a pillar in our industry with more than 40 years of hospitality experience. Our prime concern is the preservation and growth of our tourism industry and the sustainability of the Convention Center.

 

Updates

LCCC Impact & Recovery Task Force Work Update

A number of questions have arisen about the status of this initiative and so we wanted to take this opportunity to provide an update as to what is happening.

First, we would be remiss if we didn’t thank all of the stakeholders who participated in the task force and work groups for their time, commitment and willingness to cooperate fully with all requests for information. Everyone has come to the table with a can do attitude and rolled up their collective sleeves. Even though we have a ways to go, we are so appreciative of the cooperation that spirit of cooperation.

Some specific updates…

1. We had originally hoped that a report would be rendered by the end of this month (March). As we proceeded with the subcommittee meetings it became evident that we were going to need additional time to do the job correctly. Task Force chair Al Duncan suggested that we move the timeline back so that we can be as thorough and deliberate as possible. To that end we don’t anticipate having a final report until the end of April. This will give sufficient time to verify all of the facts and the board of directors of the CVB to vet the scenarios rendered by the effort.

2. The project debt financing work group has met twice and is making good progress. This is proving to be the most time consuming aspect of the project as crunch through the numbers. All the members of this subcommittee have been diligent in ensuring that everything is accounted for and that the correct assumptions are made in a conservative nature. Also, we discussed how we roll it out to the public in the most understandable way possible. We will still provide all the detail for any citizen who requests it and will post a spreadsheet agreed upon by all the subcommittee members as base fact.

3. The utilization work group met once. The group considered the current booking situation and is working to identify required infrastructure to be able to book more business in the future. More business booked has obvious advantages. Moreover larger bookings (priority 1 & 2) for the destination will generate more hotel tax thus ameliorating another issue we face. Finally, how do we compare to other destinations for benchmark purposes? This is proving more difficult than it sounds as there aren’t a ton of comparable destinations in the US for this comparison. We have a smaller group gathering data who will make recommendations to the full work group shortly.

4. The default work group met once. They identified from the loan documents what they felt is the default process and the ramifications of the same. They took the additional step of having legal counsel review the document. When that opinion is rendered, they will reconvene if need be. If not we will begin to generate the report for this area.

Please continue to check our back for updates as new information develops.

 

 

 Task Force & Work Group Members 

 

 

LCCC Fiscal Impact & Recovery Task Force Members

 

Three Work Groups

 

1.     Project Debt Financing Work Group

 

2.     Utilization Work Group

Is selling and marketing the building difficult? What will change that? What roadblocks stand in the way? How can it be cured? A subgroup of this task force will create a white paper on the topic consisting of the CVB, Authority, and PSP.

 

3.     Default Work Group

What is a financial default? What is considered a default between the projects public and private partners? A subgroup of this task force will review the existing agreements in place and provide factual answers to these questions. Members from PSP and Authority will also be asked to participate.

 

• Scott Bowser (Chair), PA Renaissance Faire
• Shane Ackermann, Amish Village

 

Funding Challenges & Task Force Formulation

 

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