Hotel Lancaster first to receive boost from new CRIZ program

The state society of physicians assistants is coming to Lancaster County Convention Center next month, and they may not be coming if it wasn’t for a hotel up the street.

The professional association is taking most of the rooms at the Lancaster Marriott at Penn Square attached to the meeting center, but it is also taking all but four of the 134 rooms at the Hotel Lancaster.

The second hotel, open for only 10 months, has been pivotal in bringing events here.

“There were a couple that if we wouldn’t be here, they would not be looking at the convention center,” said John Thomas, the Hotel Lancaster’s director of sales and marketing.

That was why the City Revitalization and Improvement Authority voted Tuesday to help finance the Hotel Lancaster project.

It is the first project in Lancaster approved under the new program that allows state tax revenue collected within a designated 130-acre zone to be used for redevelopment projects.

“While it’s a relatively small project in numbers, it’s a large project in impact,” said Randy Patterson, city economic development and neighborhood revitalization director.

The CRIZ program was intended to transform underutilized properties, Patterson told members of the authority board.

The approval was for the $8.1 million first phase of the project, said Meeder. That will allow him and his partners to acquire the 26 E. Chestnut St. property and construct a restaurant along North Queen Street.

A second $8 million phase, which they hope to begin in a year, will allow for the renovation of all 221 hotel rooms in the nine-floor building and upgrading of those already in use.

Redevelopment of the annex portion of the building, along Lancaster Square, into a $10.4 million entertainment complex is also planned, but it is being looked at as a separate project, Meeder said.

Since opening Nov. 1 with 32 rooms, the Hotel Lancaster has done relatively well. The current 134 rooms are booked nearly full on weekends, said project partner Sam Wilsker, vice president of Meeder Development.

In the 10 months since opening, occupancy has been 42-44 percent, Wilsker.

The first six of those months were largely spent distancing the new hotel from its predecessor, noted CRIZ board member Tom Baldrige, president of the Lancaster Chamber of Commerce & Industry.

The Hotel Brunswick was mired in problems before closing. Drug use, underage drinking and frequent brawls prompted city officials and the county district attorney to ask a judge to declare the hotel a public nuisance.

One of the first renovations to the building by Meeder and his group was to construct a first-floor lobby on East Chestnut Street. Along with updating the property, it also gave the renamed hotel a new address.

“We’ve turned it,” Meeder told the CRIZ board members Tuesday. “We’ve taken what was headed in the wrong direction and we turned it around.”

Lancaster and Bethlehem were chosen late last year to be the first two cities under the new state CRIZ program.

New revenue from state corporate, sales, personal and earned income, liquor, amusement and other state taxes generated by projects can be used to pay for their financing.

The city expects the Hotel Lancaster to generate $121,000 in new state revenue next year and $300,000 in 2016. Of those amounts, 80 percent will be passed to the hotel partners for debt repayment.

The remaining 20 percent will be used by the authority to repay the debt on a pair of bonds the authority will issue early next year, Patterson said.

Two studies done in 2012 cited the lack of downtown hotel rooms in addition to the Marriott as a factor holding back the convention center from booking more events.

Source: Lancaster Online