Business Plan

A business plan has been developed, which will allow the construction of the Lancaster County Convention Center and the Lancaster Marriott at Penn Square. The plan is the result of a complex and cooperative effort among government and community leaders and public and private partners. 


Project Financing (Total Cost: Estimated $174.4 million, including financing costs)

The business plan shares the expense of this estimated $174.4 million project among many partners. Funding would be contributed by the Lancaster County Convention Center Authority, Penn Square Partners, and the Commonwealth of Pennsylvania. The City of Lancaster is contributing $1 million in in-kind services, such as waving permit fees, assisting the Parking Authority, and improvements to the streetscape.

The Lancaster County Convention Center Authority funding of the project is as follows:

  • Hotel Room Tax Funding. The Authority receives a portion of the revenue generated from the hotel room tax paid by visitors to Lancaster County. This tax is projected to raise $5.8 million for the project during the construction period.
  • Hotel Tax Revenue Bonds. In 2003 and 2007, the Authority issued $63 million in bonds, secured by the proceeds from the hotel room tax. The bonds were obtained at a favorable rate with a Lancaster County guarantee, designed to protect the interests of local taxpayers.
  • Grants. The Commonwealth of Pennsylvania made a $15 million grant to the Authority. An additional $4.7 million in state grants is budgeted as contingency ($1.5 million committed by Senator Armstrong, and $3.2 million in a 2008-2009 Commonwealth of PA budget request).
  • Other Sources. The Convention Center Authority will contribute cash and interest earnings.

Penn Square Partners comprises general partner Penn Square General Corporation, which is affiliated with High Industries, Inc., and Lancaster Newspapers, Inc. Penn Square Partners funding of the project is as follows:

  • Equity. Penn Square Partners will provide $11 million in private-sector equity.
  • Lease Payments. Through a 20-year lease with the Redevelopment Authority of the City of Lancaster (RACL), Penn Square Partners will cover the debt service of $24 million of Hotel Lease Revenue Bonds that will be issued by RACL.
  • Other Grants and Loans. Various state grants in the amount of $22.75 million were obtained by RACL and an Infrastructure Improvement  Loan (IFIP) in the amount of $14.5 million was also obtained from the Commonwealth which will be repaid with future sales tax and other tax receipts attributable to the Hotel.

The project also incorporates the restoration of several historical properties and the facade of the former Watt & Shand department store. The Historic Preservation Trust of Lancaster is reimbursing the Authority for portions of work that are being completed under this Project and, in addition, the Trust will be completing, under separate contracts, restoration work not included in the Project. The incorporation of these aspects of the project will enrich the experience of those that visit and utilize the Hotel and Convention Center.

 

Redevelopment Authority of the City of Lancaster

RACL, Penn Square Partners, and the Authority have created a condominium association. Within the facility:

  • The Authority will own a fee interest in the portion of the facility that contains an exhibit hall, meeting rooms, the ballrooms, and kitchen. A fee interest is equivalent to full ownership.
  • Penn Square Partners will have a leasehold interest in the portion of the facility that contains the hotel tower. A leasehold interest provides the right of possession, but not ownership, of a property for an agreed period of time.
  • Penn Square Partners and the Convention Center Authority will have the right to use common areas, including the lobby, employee facilities, and other mechanical and electrical support facilities.


The Hotel and Convention Center is expected to open in the spring of 2009.