New Phila. food center urges state to free up funding

Construction could grind to a halt on the Philadelphia Regional Produce Market in Southwest Philadelphia because of a delay by the state legislature in approving millions owed for construction work.

The General Assembly has not yet enacted the fiscal 2010 Capital Debt Act, which would authorize millions in new borrowing, affecting hundreds of capital projects statewide.

The new market, on Essington Avenue, is strapped with $15 million in unpaid invoices from subcontractors, developer Brian O'Neill said.

O'Neill wrote Budget Secretary Mary Soderberg on Dec. 2 that the 650,000-square-foot "project will shut down" if state money does not come.

"I hope to keep everybody working. It's Christmas," O'Neill said yesterday. "I can't tell you the drop-dead date. I'm working on a number of options with the state of Pennsylvania to resolve this issue."

Soderberg sent a letter Dec. 1 to the chairmen of the Senate and House Appropriations Committees urging immediate passage of the act so the state could resume payments for more than 1,000 ongoing capital projects, including 32 in Philadelphia.

They include projects at the Philadelphia Museum of Art, the Philadelphia Navy Yard, and the North Philadelphia Health System. Also at risk is funding for a Doylestown parking garage in Bucks County, the People's Light and Theater Company in Chester County, Crozer-Keystone Medical Center in Delaware County, and the Abington Arts Center in Montgomery County.

"In total, we are currently unable to process about $375 million worth of payments," Soderberg wrote. "Each of these capital programs is running out of bond funds to provide payments to contractors and municipalities."

O'Neill said he had been talking to state economic-development officials about closing on an $11 million loan from Pennvest, an agency established by the General Assembly. The financing would "bridge the gap" until the other funding came through.

About $152.5 million of the $218.5 million public-private tab for the produce market is to come from state capital money funneled through the Philadelphia Regional Port Authority, owner of the 48-acre site and the market's landlord for at least 40 years.

The refrigeration building is nearly half-completed, with the steel superstructure, much of the roof, and insulated wall panels in place, O'Neill said.

"The Philadelphia Regional Port Authority shares the concerns expressed by Mr. O'Neill," John Estey, authority chairman, said in a letter to Soderberg. The project is "vital not only for the parties involved, but for the economic well-being of the region and commonwealth."

"We understand that this current fiscal-year budget process has been a difficult one," Estey wrote. "Unfortunately, if funds are not available to continue, the inevitable work stoppage will put 1,100 skilled tradesmen out of work in the middle of the holiday season."

O'Neill said the cost of remobilization "would be astronomical." Instead of opening on time next fall, the market "will be late and over budget."

Also, if the state port authority defaults on payments to subcontractors, the project could lose a $50 million private loan, O'Neill said, adding, "There is little chance of replacing this private capital investment during these difficult economic times."

Reached at her office, Soderberg said yesterday: "I have been told the Senate plans to take it up next week. The Senate will be back in session Tuesday. The House is scheduled to be in next week as well."

"This bill was introduced in the House and has gone through the House. It's been in the Senate for quite a while now," she said. "It is expected to be amended, so it will come back to the House. I don't anticipate any issues with the House concurring on any Senate amendment."

The budget secretary said, "The issue is getting it out of the Senate. I don't understand why they haven't acted. This is something that is required by the constitution. It should have been done at the end of June or early July. The governor has repeatedly called for passage of it, and it hasn't happened."

The Capital Debt Act is not tied to the state's $27.8 billion spending plan, approved in October after a 101-day deadlock. "This is a separate piece of legislation that is required on an annual basis," Soderberg said.