New DRWC operating budget includes funding boost from city
The Delaware River Waterfront Corporation’s recently adopted $7 million 2011 operating budget includes a 100 percent increase in city funding and counts on collecting $154,000 more in parking fees and $27,000 more from events held at DRWC’s properties and rentals of those facilities.
The city’s contribution to the related quasi-governmental agency doubled from $250,000 to $500,000, despite a tough budget season for the city that resulted in many controversial funding cuts elsewhere, including public safety.
Mayor Michael Nutter wasn’t available for comment, but Deputy Mayor Alan Greenberger, who oversees planning and economic development and sits on the DRWC’s board of directors, said the boost in funding was a reward for a job well done. “The mayor is thrilled with what is going on at DRWC. The new programming is terrific. The Master Plan (for the Central Delaware) is in operation, the Race Street Pier is going to happen,” Greenberger said. “This is the mayor’s way of saying ‘great job. This is terrific.’”
This is the second operating budget for the organization — which manages public waterfront land that is owned by the city — and its second year since Nutter dismantled its often-criticized predecessor, the Penn’s Landing Corporation. The organization is also tasked with overseeing the Master Plan for the Central Delaware, expected to be completed in January 2011. The plan will guide development on the Delaware between Oregon and Allegheny avenues for years to come.
The total DRWC operating budget increased from $6.5 million in fiscal year 2010. Originally set at $6.8 million, cuts were made to lessen a shortfall brought on largely by the faltering economy.
Greenberger said he couldn’t specifically say from where the city’s additional $250,000 came. In a budget as large as the city’s there are probably 5,000 different items being funded, he said. The fact that the waterfront corporation has been able to “hold its expenses under control” made it easier, he said. He praised DRWC for keeping staff expenses down and switching to an automated parking system that, coupled with the increase in events DRWC and its tenants sponsor, will bring revenue.
The work DRWC is doing on the waterfront is expected to spur economic development for the city, bringing jobs and tax revenues in an area that has not met expectations previously. That “has bigger economic implications for the city than the extra $250,000 the mayor committed,” Greenberger said.
Joe Forkin, DRWC vice president for operations and development, started his waterfront work with the Penn’s Landing Corporation in 1997. The DRWC asked the city for more money this year, he said, but the increase was “A big bump and a little bit of a surprise, even to us.”
DRWC finished fiscal year 2010 with an operating deficit of nearly $114,000, and that was considered good news by the board. The deficit had been projected at nearly $279,000. The deficit was largely due to terrible performance of investments, Forkin said. The loss was cut in part by instituting a 10 percent cut in all administrative salaries and by trimming benefits for future retirees. Those salary cuts have been reinstated in the new budget, meaning administrators pay is now back where it was in fiscal year 2009.
When asked if this fiscal year’s balanced operating budget was only possible because of the extra funding from the city, Forkin said the budget was going to be balanced this year regardless. Without the money, DRWC would have just had to do less, he said.
Years ago – before Forkin’s tenure – the Penn’s Landing Corporation was completely funded by the city, he said. At first, the city provided $1.1 million, he said. Then during the administration of Mayor John Street, the amount was stripped back incrementally to $750,000, then $500,000, then $250,000 – the level it has been for a number of years.
Forkin called the city’s $250,000 increase a “one-year thing,” saying that “the thought ultimately is for us to be self-sustaining” in terms of operating costs, though the organization expects to continue to look to the city for capital project funding. As part of the master plan process, new funding sources are being researched, Forkin said.
OTHER BUDGET HIGHLIGHTS
DRWC generates a huge chunk of its income from parking. The many events DRWC sponsors – movies, fireworks and concerts, to name a few – are free. But parking isn’t. And when others hold events at the Festival Pier or Penn’s Landing, such as Live Nation concerts, lots of folks park in DRWC-owned lots at Market, Walnut, Lombard, Vine Street, and the Festival Pier.
In fiscal year 2010, parking brought about $2.39 million to DRWC coffers. That was below the projected $2.48 million in revenue, largely because the severe winter put a damper on the ice rink, Forkin said. For fiscal year 2011, the budget projects $2.5 million. The bump is partly due to a larger number of events on the waterfront, he said. But it is also because an automated parking system has lessened personnel costs, encouraged use with credit card payment options, and decreased losses.
The automated system has been in place for about two months now, and 30 percent of customers are using credit cards. “That’s giant,” Forkin said. “It makes you realize the sales we were missing out on before.”
The old system had a set of checks and balances to make sure no one parked for free, and no one pocketed customers’ money. But “in a cash business, you always have to assume some percentage of loss,” Forkin said, either due to human error or human nature. The new computerized system cuts down on that, he said.
It also cut down on parking attendant hours, mostly during off-peak times during weekdays when there are no events, Forkin said.
The DRWC lost a revenue stream that provided almost as much money as the boost from the city: $450,000 that in the budget is called “Performance & Activities Subsidy,” a payment from the Hyatt hotel, located on DRWC land. The Hyatt continues to pay its annual lease, but the $450,000 per year was a pre-payment of debt for funding provided by DRWC six or eight years ago to help the hotel fund its mortgage, Forkin said. The line item was named for what the money was used for.
When the fiscal year 2010 operating budget was assembled, DRWC counted on $1.32 million in tenant rents. The actuals came in at $1.27 million, and $1.28 million is projected for next year. The reason: The Ride The Ducks boats haven’t operated since the tragic accident in early July. Whatever happens with the duck boats, a new river-touring paddle boat, The Philadelphia Belle, will provide new revenue for the DRWC, Forkin said.
Grants to pay for day-to-day operations are notoriously harder to come by than those that pay for capital projects, and this fiscal year, DRWC isn’t counting on any. The DRWC originally projected $200,000 in operating grants for 2010 that did not materialize. The DRWC has received capital grants, including $1 million from the William Penn Foundation that is paying for the Race Street Pier re-do.
Reach the reporter at kgates@planphilly.com.
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