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Study on selling PGW to be made public, Nutter says

A long-awaited study about the possibility of privatizing the Philadelphia Gas Works will be made public next week, Mayor Nutter said during a speech to the Greater Philadelphia Chamber of Commerce on Monday.

A long-awaited study about the possibility of privatizing the Philadelphia Gas Works will be made public next week, Mayor Nutter said during a speech to the Greater Philadelphia Chamber of Commerce on Monday.

The mayor also said he was working with City Council President Darrell L. Clarke on "pursuing opportunities to transform the Divine Lorraine," the vacant, ghostly hotel that looms over North Broad Street at Fairmount Avenue.

Both ideas have been discussed for decades, never getting off the ground because of huge financial barriers.

"I think the issue has always been, there's never been a willing buyer, because it's always had too many problems associated with it," Phil Goldsmith, who was managing director under Mayor John F. Street, said of a PGW deal. "But in the last eight years, there has been a lot of cleaning up done at PGW and, who knows - maybe the time is right."

In 2010, the city entered into a $200,000 contract with Lazard Freres & Co. L.L.C. for a feasibility study of selling PGW compared with retaining ownership.

It's not clear what the Lazard report will recommend, and Nutter declined to offer details.

PGW has about 500,000 customers, many low-income whose bills are subsidized by other customers, leading to the highest rates in the state.

Clarke said that he favored selling assets in concept, but that PGW would be a complicated deal. He said that he did not want to see any jobs lost, and that the city would have to find a way to protect the customers who now get financial assistance.

The possible sale of the gas utility is part of a broader project, headed by former mayoral candidate Tom Knox, of selling city assets to raise money.

Clarke said that among the assets he could envision selling, the city-owned parking lot beneath John F. Kennedy Plaza was atop the list. Selling the lot would have little impact on city operations and the public, and it would have a high return.

"And why are we in that business?" he asked, referring to parking.

In a speech that largely repeated his campaign themes about the need to boost economic development, reduce crime, and improve education, Nutter also touted a proposed expansion of Philadelphia International Airport, increases in minority participation in city contracts, and the burgeoning restaurant scene on North Broad Street near the Divine Lorraine. The former hotel is owned by a development partnership including a Dutch company, and Nutter said the hotel's financial situation is complicated.

He did not offer details on any possible deals.

Clarke said the city and lenders, developers, and owners came close to completing a deal for the Divine Lorraine last year that included offering Community Development Block Grant money for affordable housing. The state also was prepared to authorize tax credits, Clarke said.

Clarke doesn't think the deal can be done without public assistance, given the challenging nature of the building. The real moneymaker, he said, is the vacant land behind the Divine Lorraine that was part of the deal that had been under negotiation last year. Developers would have put a mid- to high-rise building there with retail. The plan fell through.

"Since then, there have been a number of people who have expressed interest," Clarke said. "I think realistically, by the middle of the year, we should have a deal on the table with a developer."