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Also newspaper reporters were requested to do a contract by contract comparison but no such report has appeared in the press yet. Certainly the spreadsheet can be refined (for example the facade stabilization contract is being rebid), but it will be very interesting to see if project proponents attempt to support the claim that the base construction bids only exceeded estimates by 15%.
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Important Websites for FACTS on the convention center:
Convention Center/Newspaper LIES!Molly Henderson Proves it! May 21, 2006 Dear Friends,
Last week, two important hotel/convention center events happened and one important event did not happen. As one of your County Commissioners, my purpose in providing you a copy of this e-mail is to provide you with information not provided by the Lancaster Newspapers, one of the three partners in the hotel. If you are not interested in this information, please hit "delete" and accept my apologies for any inconvenience.
First, on Wednesday, the last of the hotel/convention construction bids were opened. You may have read in the newspapers that the base bids were $13.6 million or 15% over budget. If that were true, it would be a blow to the proposal, as there is no more money available. However, it appears that the construction bids were about $24.2 million or almost 29% over budget. I attach a spreadsheet prepared by one of the Lancaster County Convention Center Board members which compares the hard costs as prepared by High Associates and submitted to City Council, with the base bid numbers reported in the newspapers. As the project planners tell us they are looking at alternate bids to reduce the construction cost, in considering what sort of project might be left after the cuts, it is important to know whether they need to cut 15% or 29%.
Second, in an e-mail from Commissioner Shellenberger and me two months ago, we reported that the County had hired PKF Consulting, one of the most respected independent hospitality consulting firms in the world, to provide an independent analysis. (PriceWaterhouseCoopers had withdrawn earlier market studies and declined our request to provide a current feasibility study at County expense.) On Thursday, PKF released the attached four page summary Memo of PKF's economic analysis of the hotel/convention center proposal.
(click to read memo)
Even assuming that the debt service projections of the project proponents are correct, PKF found that the hotel/convention center will lose $6.6 million per year, with only $4.4 million covered by the hotel tax and grants, leaving $2.2 million per year to be paid by the City and County under their guarantees. Using more likely assumptions, the annual loss could reach $9.2 million per year, meaning $4.8 million additional per year to be paid by the City and County. And all that assumes that the project can be built for $140 million, although the current overage suggests a price tag of $164 million.
Third, – the event that did not happen – you did not hear an announcement as to the timetable, cost and finnancing of the new parking garage everyone agrees is necessary for the hotel/convention center proposal. We heard a year ago the parking problem was solved. When will the parking garage be started? Finished? Where's the money coming from?
Since the
attached spreadsheet
shows $24.2 million over budget, where did the at least $13.6 million over budget number come from? While the
attached spreadsheet
is not perfect, nonetheless as admitted in the Sunday News, they simply compared the $102.6 million total of the bids opened Wednesday with the $89 million construction budget. But the hard cost construction budget includes many other bids opened earlier and site acquisition costs, pushing the total up by another $10.6 million.
As the project proponents have not yet provided a contract by contract comparison, the spreadsheet bid numbers are taken from published reports in the newspaper. The LCCCA Board member who prepared the spreadsheet asked Dave Hixon, Executive Director of the LCCCA, to provide such a spreadsheet, but he did not do so. Also newspaper reporters were requested to do a contract by contract comparison but no such report has appeared in the press yet. Certainly the spreadsheet can be refined (for example the facade stabilization contract is being rebid), but it will be very interesting to see if project proponents attempt to support the claim that the base construction bids only exceeded estimates by 15%.
I urge hotel/convention center proponents to seriously reconsider their position in light of these developments. The developers have already jumped the gun by starting demolition, first without a permit, and now without adequate project financing to support the base bids. Under these circumstances, I believe the County Commissioners must continue to take prudent action to protect the citizens of Lancaster.
Molly Henderson |