“Quite simply, the central waterfront has suffered for decades from an absence of planning and an absence of management. Regardless of what is decided about casinos, we need to commit to a course of thoughtful planning, capable implementation and well-funded management.”
Paul R. Levy, president, Center City District, Testimony before the City Council Rules Committee, February 25, 2008
Great visions require managers with the power and resources to implement them. We have set high standards for the future of the central Delaware, and we must set similarly high standards for the waterfront manager—the management organization that will have the responsibility of implementing the civic vision and the master plan to achieve waterfront revitalization over the long term. A waterfront redevelopment project succeeds or fails based upon the abilities of its manager and the strong, visionary leadership of the mayor and the City Council.
These are among the key functions the waterfront manager plays in peer cities:
The waterfront manager’s mission should be to implement the Civic Vision for the Central Delaware and the anticipated master plan for the central Delaware in order to grow the city’s economy, improve quality of life along the river and in adjacent neighborhoods and ensure that each new development or open space adds to the attractiveness and health of the river’s edge. To be successful at this difficult job, the waterfront manager must have the means to finance capital improvements, acquire land and conservation easements, carry out operations and maintenance and improve open spaces. The waterfront manager must have adequate financial strength to be able to move the central Delaware project forward in times of economic downturn as well as real-estate booms—pushing forward parks, trails and street extensions even when economic conditions make private investors reluctant to move forward on large-scale, private development projects.
East Boston's Piers Park, which reclaims an old pier and provides direct waterfront access, is owned and maintained by the Massachusetts Port Authority.
After analyzing the four potential waterfront management structures (see sidebar), this action plan proposes that a reformed and rehabilitated Penn’s Landing Corporation is the best choice for waterfront manager. A reformed Penn’s Landing Corporation will have the powers and annual revenue needed to rapidly and effectively transform the riverfront. Penn’s Landing Corporation has the power to finance riverfront public-infrastructure projects through bond issues and other means, to buy and sell land and legal rights-of-way (although not to hold conservation easements) and to coordinate efforts among government agencies. The Penn’s Landing Corporation was established as a quasi-governmental corporation in 1970 to manage publicly owned land on the central Delaware; it now extends from just south of Washington Avenue to just north of Spring Garden Street (4). Philadelphia, like New York and other cities, believed that a powerful, quasi-governmental entity with the authority to issue bonds without voter approval, execute contracts without a lengthy bidding process and conduct business in private would bring new investment to a post-industrial riverfront efficiently. These corporations created for the public benefit, such as Penn’s Landing Corporation and Battery Park City Authority in New York City, were given many of the powers of government without the safeguards. As a result, they made decisions affecting the future of the city without public input, and they often became known as shadow governments susceptible to patronage and corruption (5).
A twenty-first century waterfront manager should have a clear mission statement and dedicated funding, be open, transparent, responsive to residents and property owners and accountable to the mayor and the public.
Penn’s Landing Corporation, as it is currently governed, could not be an effective waterfront manager. The 501(c)(4) corporation is neither open nor accountable. It has unpublished by-laws, holds all meetings behind closed doors and does not have a strategic plan that defines its policies or goals for the public. The Penn’s Landing Corporation does not operate under the Sunshine Act (the state law regulating open meetings) or any open records laws. While some publicly owned parcels have been successfully redeveloped, in its thirty-eight-year tenure, this agency has faced dramatic and very public failures in redeveloping the waterfront and has left publicly owned land underutilized. Discussions during the planning process for the Civic Vision for the Central Delaware revealed that Penn’s Landing Corporation has lost the trust of the majority of the four thousand Philadelphians who contributed to the civic vision. They view Penn’s Landing Corporation as a secretive agency that is a part of Philadelphia’s backroom political culture. The model of a quasi-governmental organization with no accountability to voters has not worked.
Penn’s Landing Corporation can be rehabilitated into an effective, open and accountable waterfront manager through a reform processthat is very public and that results in a very different type of agency. A complete rehabilitation of its governance and budget processes will be needed to transform this agency into a twenty-first century waterfront manager and to reclaim the public’s trust. Its articles of incorporation can be amended to increase its geographic jurisdiction to include the whole central Delaware area. Its board can be changed to reduce the number of political appointments, creating a leaner corporate structure. Regional corporate leaders will serve on the board as well as residents and experts in areas such as law, architecture, planning, fundraising and development (9). A requirement currently included in deed agreements with the Philadelphia Redevelopment Authority that all public land be leased or sold for fair market value or higher should also be changed because it precludes the use of public land for parks and public spaces (10).
Penn’s Landing Corporation has a board made up of twenty-six members, each serving a three-year staggered term. The mayor is a board member, along with seven other members of his administration. Other public board-member positions include the president of City Council and First District councilperson, First District state senator and First District Congressperson, representatives of three local Chambers of Commerce and the chairpersons of the Redevelopment Authority and Philadelphia Industrial Development Corporation. In addition, nine private-sector members are elected by the board, typically after being recommended by the mayor. Each year, three of these private-sector members are selected. In FY 2007, the corporation’s revenues were $8,462,275. Significantly, in that year, its expenditures exceeded revenues by over $40,000. The city contributes $500,000 to PLC’s annual budget—6 percent of the total budget (11).
The waterfront manager should track progress on the riverfront by setting clear goals and regularly updating data that will show improvements in the economy, quality of life and river health in the central Delaware region. Important data to track include the following:
Battery Park City is owned and managed by a public benefit corporation that has floated bonds to create the public space that fills this 92-acre community in Lower Manhattan.
REFORMS TO THE GOVERNANCE STRUCTURE
The following proposed reforms are vital to the effectiveness and integrity of the board and governance structure of the Penn’s Landing Corporation, and many can be accomplished through a board vote (12):
Economic: Open and accountable manager will increase private investment and leverage investment with public improvements.
Environmental: Waterfront manager can take actions to clean up the river’s edge, plant wetlands and maintain a healthy greenway.
Community: Waterfront manager can restore faith in the potential of the riverfront to serve Philadelphians and partner with neighborhoods.
Impact on City Budget: The Regional Plan Association studied the management costs for significant greenways and riverfront public spaces in New York City. They found that costs for the management and administration of trails, greenways and parks, including salaries of managers and supervisors and associated administrative supplies, averaged $34,000 per acre per year. In fact, this is the amount that Hudson River Park spent on management in 2006. For 35-acre Battery City Park, management costs for 2007 were $42,000 per acre (13). Perhaps the best estimate of management costs would come from Penn’s Landing Corporation’s current budget, which we were unable to obtain for this report.
Penn’s Landing Corporation’s current revenue stream from leases of land and parking is about $8 million a year (based on the best information available).
Tax Increment Financing (TIF): A newly popular tool for closing funding gaps. A TIF created under the Commonwealth’s Tax Increment Financing Act could provide dedicated funding for trail creation and maintenance. Tax-increment financing takes the incremental increase in taxes paid, due to the development or redevelopment of former un- or underdeveloped sites within a defined district, and dedicates this increment to finance new development, supportive infrastructure and public-area improvements. Within a TIF district, incremental revenues from multiple taxes are devoted to pay the debt service on a bond issue that could provide upfront money to build the trail and other public improvements exclusively within the boundaries of the TIF district. Under state law, properties already benefiting from 10-year tax abatements do not participate in the TIF until the expiration of their abatement. However, no new abatements may be granted within the boundaries of the TIF District, though developers of new projects could benefit instead from low-interest TIF financing as well as publicly funded infrastructure and public area improvements.
In 2007, Economics Research Associates (ERA) estimated the potential bonding capacity of TIFs to raise funds for riverfront infrastructure improvements, including trails (14). ERA studied four sites:
ERA estimates that, in combination, the four sites will produce bondable TIF capacity of up to $371 million, which would generate annual taxes of up to $177 million in 2007 dollars. The term of the TIF would commence in 2011 and conclude in 2030.
Business Improvement District (BID): Assessed fees from area owners could add to revenues.
Parking-Garage Revenues: This aspect of PLC’s budget could be expanded through well-placed, attractive public parking.
Four percent of gross casino revenues are specified by the Commonwealth’s Gaming Act to offset increased city operating costs for managing the impact of the casinos on transportation, the police, and the health, safety and social welfare of areas surrounding the casinos.