Big pieces of the plans to redevelop the old Philadelphia Navy Yard are falling apart, putting millions in public money at risk.
Aker Philadelphia Shipyard is demanding that Pennsylvania supply $42 million, pronto, or the European-owned company, which has already burned through more than $400 million in state and federal funding to maintain a few hundred skilled jobs, will shut.
Now Tasty Baking Co., the fresh-baked junk-food maker led by genial, well-connected Charles P. Pizzi (also chairman of Philadelphia's Federal Reserve branch), has had to ask Pennsylvania to accept delayed payment on the $31 million taxpayers lent his company to finance its underperforming Navy Yard bakery.
Tasty's situation is so dire that it announced Wednesday it will look to merge or sell itself as it tries to refinance.
And the Delaware River Port Authority said Wednesday that it was closing the Philadelphia Cruise Terminal after 12 years of failing to attract a permanent share of the big-boat market.
In a statement, DRPA bragged how it had saved long-suffering bridge tollpayers almost $3 million from future operating subsidies and leasing costs by pulling the plug. But when I asked, DRPA acknowledged it had also dropped $21 million in capital investments in the terminal. That's not counting its recurring operating deficits.
In all three cases, politically controlled agencies loaded with public dollars stepped in where banks and private investors wouldn't, or couldn't, or didn't dare.
If the projects had worked as advertised, we'd have shining proof of how government can "pick winners" and support industries, creating or preserving good jobs and benefits.
Will Gov.-elect Tom Corbett follow in the footsteps of his predecessors Tom Ridge, who first subsidized the shipyard; Ed Rendell, who bailed out Tastykake; and ex-State Sen. Vince Fumo (D., Phila.), currently incarcerated, who promoted these and many other taxpayer-funded projects in and around his district?
Will Corbett keep investing, in the hope that the markets for these kinds of unwanted products will turn?
"It's a fluid situation," Corbett spokesman Kevin Harley told me regarding Tastykake. "It will certainly be reviewed by Gov. Corbett when he takes office on Jan. 18, if it's not resolved by then."
Similarly, Corbett will "examine" the Aker shipyard's latest demand "and see if it makes sense for the taxpayers," Harley said.
Will Corbett fund similar projects for constituents elsewhere in the commonwealth? "The state can no longer afford long-term-borrowing projects. We just don't have the money," said Harley. It's not a "blanket 'no,' " he quickly added. "Every project will be vetted on the merits. But certainly the level of funding will be greatly decreased."
Who'll buy Tastykake?
," says local stock watcher
, owner of $50 million
Costello Asset Management
, of Huntingdon Valley, when I asked who is most likely to take over Tastykake if the troubled baker decides to sell.
Bimbo Bakeries USA is the Mexican-owned, Horsham-based, highly acquisitive purveyor of Arnold, Freihofer's, and Stroehmann breads; Boboli pizza crusts; Entenmann's cakes; Thomas' English muffins; and many other baked goods.
Bimbo recently hired Vincent A. Melchiorre, a former Tastykake marketing executive. Bimbo wasn't returning calls Wednesday.
Flowers Foods is the Georgia-based, publicly traded maker of Mrs. Freshley's cakes, Nature's Own bread, and other brands, and it has shown interest in Tasty before. Flowers officials didn't return calls, either.
What about Pennsauken's J&J Snack Foods, maker of ICEEs and SuperPretzels?
"No way," Costello said. With no debt and tens of millions in cash, "they could buy Tastykake in a burp, but J&J makes stuff that lasts for weeks. They buy struggling national brands with long shelf life, or else frozen products, and turn them around. They have not been interested in regional operations with a short shelf life."
How about Tennessee-based Little Debbie? "Little Debbie would love to see [Tastykake] die," Costello said. "They ship cakes that have a long shelf life [from Southern plants] that pay a fraction of [Tasty] wages."
If Tasty sells, someone will buy the plant and keep it running, Costello predicted. "The question is: How many people and how much overhead will the buyer keep?"
What if a buyer promises to keep Tasty people working for a while - if Pennsylvania agrees to ease terms on the millions Tastykake owes the state?
"If I was the state," said Costello, "I'd bargain hard."