New Face of Lancaster
Lead architect Bob Neal isn’t most proud of the hotel tower and convention center he helped build or the historic façade he helped save. It’s the exposed raw concrete columns connecting the two that are his biggest sources of pride. They join the century-old Beaux Arts facade to the newly built Lancaster Marriott at Penn Square and Lancaster County Convention Center.
The seamless blending of old and new epitomizes this project, from its design to development. The facade was the face of the landmark Watt & Shand department store, the commercial hub of the bustling Pennsylvania city since the late 19th century. When new owner Bon-Ton closed the doors in 1995, fears grew developers would demolish the building.
After sitting dark for three years, two local business leaders formed a partnership and bought the building for $1.25 million, beginning an 11-year odyssey that evolved into a $177.6-million public-private partnership formed to help revitalize the city of 50,000.
“This is a project for the future,” says Nevin Cooley, the president and CEO of Lancaster-based High Real Estate, which led Penn Square Partners, the private entity that developed the hotel. “It was a gift from one generation back, with their financial effort, to empower this generation to leverage their energy to create what would be a gift for the next generation.”
The end result, a 300-room hotel and adjoining convention center with 90,000 square feet of meeting space, did not come easy. The funding, a mix of public and private money, drew legal challenges as the ownership puzzle became more complex. The design, which included saving the facade and merging several historic pieces into one integrated facility, was just as complicated for Neal and design firm Cooper Carry.
In 1998, S. Dale High, chairman of High Real Estate, and Jack Buckwalter, the chairman of the family-run group of local newspapers, formed Penn Square Partners to purchase the vacant Watt & Shand building. They had public hearings to discuss possible uses for the building. One suggestion was a hotel; another was meeting space. A separate group was looking into developing a convention center based on an economic revitalization plan from the 1980s. “At about the same time, the stars aligned in our state capital: a governor was looking at investing significant state dollars to different locations,” says Cooley.
In 1999, the Lancaster County Convention Center Authority was formed and a 3.9-percent hotel room rental tax was enacted to help build a new meeting facility. Soon after, a group of 37 hoteliers filed suit contending the tax was unconstitutional and an unfair burden. The Pennsylvania State Supreme Court ruled the tax constitutional in 2002.
By then, Penn Square Partners and the LCCCA had joined forces to develop the joint project and hired Cooper Carry, an architectural firm specializing in public-private partnerships, to design it. PSP chose Marriott as the flag and Interstate Hotels & Resorts was hired to manage both businesses.
“This is unique,” says Kevin Molloy, executive director of the LCCCA, “because you are working with an integrated facility with two ownership groups. By hiring one operator, you don’t have one employee who stops at a certain point.” The union continued with the design approach. “To get the most integrated use of space, we needed to erase the physical lines of ownership and talk about functionality of space,” Cooley says.
Public money couldn’t be used for the private development of the hotel, so the Redevelopment Authority of the City of Lancaster (RACL) was formed to acquire state grants and a bond. In the end, the bulk of the money for the convention center came from the hotel tax and the LCCCA bond. The hotel was paid for through private equity from PSP and grants and the bond acquired by the RACL, derived from projected future sales tax income, that in essence became the mortgage to be paid by PSP over the next 20 years.
A condominium association was formed to define the physical ownership. The RACL owns the hotel, including the restaurant, and leases it to PSP, and the LCCCA owns the convention center. The lobby and other spaces are co-owned and operated by the two. “There is a synergy to this all, where we said we could be more together than we could separately,” Cooley explains. “This is one of the most seamless public-private spaces you’ll find.”
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