Moratorium on riparian rights lifted

June 20

By Kellie Patrick
For PlanPhilly

The Foxwoods and SugarHouse casino concerns would each pay the state about $2 million for the right to build on state-owned land at their proposed riverfront sites under a recommendation recently presented to legislators.

And a 14-month moratorium on granting rights to use the land at issue – called riparian land – has been lifted. This clears one hurdle for any developers who can persuade the state legislature that they deserve to build on the sometimes wet, sometimes dry, sensitive swath of land that runs along the Delaware, between the bulkhead line and the boundary between piers and the shipping channel.

“We asked for a temporary, voluntary suspension of any legislation that would require the commonwealth to convey waterfront rights until we had an opportunity to research. Now that we provided our recommended policy to the legislature, there is no need to request further voluntary suspension,” said James P. Creedon, Department of General Services Secretary.

The casinos’ $2 million fees would cover the cost of a 99-year lease, based on the proposed rate of $5 per square foot, which was delivered to the House State Government Committee last week by Creedon, and an approximation of infrastructure improvements each would be required to make.

That would be quite a price hike from past practice, when the state often granted 99-year leases for $1. But the rate has left some legislators asking, “Why so little?” even while at least one casino representative asks, “Why so much?”

A majority of legislators must be convinced the suggested figures are the right ones if they are to ever go into practice.

A new state law is needed to put them into practice, said General Services Spokesman Edward Myslewicz.

 “It is up to the legislature to consider our proposal and introduce legislation for riparian rights,” he said.

“There was some apprehension to the Secretary’s presentation and his comments,” said House State Government Committee Executive Director Rodney Oliver. “In general, there was concern about whether $5 was enough.”

Legislative recourse is simple, Oliver said –  any unsatisfied legislator could propose a law with an alternative fee structure.

“Considering in the past that these rights were essentially given for free or nominal consideration, $5 per square foot is a fair return to the taxpayers for the value of this land,” Myslewicz said.

“The working group considered other methods of valuation including appraisals, assessed values or transaction based fees,” Creedon said, according to a copy of his testimony (click here).  “However, after careful consideration, we determined that a flat fee based on square footage is the best method because of its consistency, transparency, and ease in which the rent can be built into the project and financed,” Creedon told the committee.

The proposed $5-per-square-foot fee is similar to those charged in other states, including Virginia and Massachusetts,” Creedon said. It is not so “excessive that it would place residential projects in jeopardy,” he said

Myslewsicz pointed out that the proposed fee is in addition to “significant public improvements for public access that may be required” by the Department of Environmental Protection.

Many environmental and community activists, as well as river-ward residents, have said access to the river is of crucial importance to them.

In addition to public walkways, the recommendation includes free public parking, and suggests that improvements must be made within five years. The developer would have the responsibility to maintain these things.

From the casino point of view, Jeffery Rotwitt, an attorney who represents Foxwoods, commends the state for trying to create a “reasoned, orderly procedure for securing riparian rights,” but said he can’t help wondering about the methodology leading to a $2 million price tag for his client. Especially considering that his research shows one residential developer paid $2,000 for a 200-year lease and another bought riparian land outright for $100,000 within the past two years.

The casinos – or any developer – could earn credits toward their lease fees by building infrastructure, such as water, sewer or traffic improvements, beyond that required by the state.  “If a special services district for the riverfront or other management non-profit were created in the future, contribution to their organization would also be considered a credit,” Creedon said during his testimony.

These recommendations took more than a year to arrive, and came at a time when the former sleeper topic of riparian rights has rankled many in Harrisburg and captured the attention of some anti-casino activists, who hope SugarHouse and Foxwoods won’t be given the rights they want and will take their plans elsewhere. (Officials from both casino projects have said they want the rights, but do not need them to build.)

In April 2006, with proposals for casinos and other riverside development coming in, Gov. Rendell called for the moratorium on these leases so that the team of staffers from the General Services, the Department of Environmental Protection, and other state agencies could review the way riparian rights were granted and the revenue such leases generated.

As the study stretched on with hardly a clue from the state what was happening, both casino developers and some legislators grew increasingly impatient.

The casinos were eager to start construction on projects as they had imagined them.

The legislators – including State Rep. Michael O’Brien, who initiated the meeting with Secretary Creedon – felt left out of the review of a process in which they had always held a key role. In Pennsylvania, riparian rights have always been granted via an act of the legislature – basically, a new law was passed each time. By tradition, only a legislator whose district included the land a developer wanted could propose the law that granted riparian rights.

The state’s proposal does not address any of this, Myslewicz said. O’Brien, convinced that the governor had no right to call for a moratorium on something that comes under legislative purview, put the stoppage to the test. He is floating legislation that would grant riparian rights not to a casino, but to a company owned by Donald Trump with plans to build condos. O’Brien also has submitted legislation that would grant riparian rights to another developer, NCCB Associates, L.P.

O’Brien’s spokeswoman did not return a call yesterday.

The moratorium was lifted before the State Government Committee acted an either bill.

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