LancasterOnline.com, July 18

Lancaster Newspaper's stake in project surprises foes

By Tom Murse
Lancaster New Era

There were few surprises at the Lancaster Convention Center hearing July 12.

But, in one of them, the public learned for the first time what stake each of the investors in the hotel part of the project holds.

According to testimony by Mark Fitzgerald, a Penn Square Partners executive:

• Penn Square Limited, which is owned by Lancaster Newspapers, owns 44 percent.
  
• Penn Square General Corp., which is owned by High Real Estate Group, owns 44 percent.
  
• And Fulton Bank owns 12 percent.

The disclosure of the newspaper company’s previously undisclosed level of investment prompted gasps of surprise from project opponents who were observing the two days of testimony.

But aside from being just another interesting fact, that 44 percent investment became a key component of the argument that attorneys for the county commissioners were building.

Supporters of the downtown convention center and hotel claim the $140 million project is imperiled by the commissioners’ vocal opposition.

The commissioners’ actions against the project, they maintain, have led to delays and have raised project costs.

But, in his closing arguments on July 17, county commissioners attorney Howard L. Kelin cited the newspaper publisher’s 44 percent investment — among other things — to rebut that claim.

He said that because of LNP’s involvement, the developers don’t need a court injunction to suppress the commissioners’ opposition to the project.

“Plaintiffs haven’t had any problem getting the newspapers to articulate their position in this case,” Kelin told Judge Joseph C. Madenspacher. LNP publishes the New Era, Intelligencer Journal and Sunday News.

Kelin also said it was ironic that LNP, which “otherwise promotes itself as a champion of the First Amendment,” was seeking a “gag order” against the officials.

Ernest Schreiber, editor of the Lancaster New Era, said his newspaper and the company’s Web site have given opponents ample opportunity to voice their criticism.

“If it were not for the many stories about them and the many letters and comments by them that we have published, the opposition to the project in this community would be largely unknown,” Schreiber said. “We have done our best to present all sides.”

The commissioners had sought to learn the percentage ownership of Penn Square Partners since 2005, when they included a query about it in a list of 57 questions about the project.

Kelin said today that the percentage ownership only was revealed during his deposition of Fitzgerald, an executive vice president of Penn Square Partners.

John M. Buckwalter, chairman of Steinman Enterprises, which owns Lancaster Newspapers Inc., said the makeup of Penn Square Partners was not released sooner because “at that time Penn Square Partners did not feel that that was relevant.”

He added that any insinuation that the developers were seeking a gag order is wrong.

“The only thing that is being asked for is that (the commissioners) are not allowed to say they’re going to take an illegal action,” Buckwalter said.

“The First Amendment does not cover somebody who’s going to make an illegal statement that is designed to harm a project,” he added.

Buckwalter, responding to Kelin’s assertion that Penn Square Partners has the newspaper to articulate its position, said: “When we went into this, all of the editors were advised that we are to treat this as if we are not involved with Penn Square Partners. We should treat this as any other project we are reporting. I think we’ve achieved that.”

Nevin D. Cooley, the president of Penn Square Partners’ general partner, Penn Square General Corp., confirmed the ownership makeup.

Despite its level of investment, LNP is considered a limited partner, a legal term that refers to liability and not the money it contributes.

According to the Pennsylvania Department of State, a general partner assumes the liability for the debts and obligations of the partnership.

Limited partners do not have any liability “beyond the capital contributions they make to the partnership.”

Fulton Bank is also a limited partner of Penn Square Partners.

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