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The Philadelphia Parking Authority sank millions into a new towing headquarters. Now it’s vacant.

City Councilmember Helen Gym wonders if it was "malfeasance or just monumental stupidity."

The Philadelphia Parking Authority is embroiled in a lawsuit over a semi-abandoned development project, seen here, on the Delaware River known as "Lot 9." The agency spent millions leasing and rehabbing the property as its new towing and impound headquarters, but things went awry. PPA officials will not discuss any aspect of the plan.
The Philadelphia Parking Authority is embroiled in a lawsuit over a semi-abandoned development project, seen here, on the Delaware River known as "Lot 9." The agency spent millions leasing and rehabbing the property as its new towing and impound headquarters, but things went awry. PPA officials will not discuss any aspect of the plan.Read moreALEJANDRO A. ALVAREZ / Staff Photographer

On a gray Friday morning in February, geese marched like security guards around a defunct power plant along the Delaware River in Port Richmond. A trash can overflowed by an empty office building. A parking lot pooled with rainwater.

This was the sorry state of Lot 9, the Philadelphia Parking Authority’s little-known development project, where there wasn’t a parked car in sight.

Months before the pandemic, then-PPA Executive Director Scott Petri began leasing this tucked-away riverside land to build a new headquarters for the authority’s towing and auction operations.

“It was an ideal location. It was secluded. It was close to I-95,” said Christopher Nawn, the PPA’s former financial officer and a business associate of Petri’s, in an interview this month.

The PPA ended up spending more than $3.6 million on building renovations, construction consultants, and office furniture, financial records show.

But today, Lot 9 appears all but abandoned.

A trove of emails and financial documents obtained by The Inquirer shows how the development project went off the rails.

As the PPA continued to cut six-figure checks and authorize wire transfers for Lot 9, some officials grew increasingly concerned about the spending. Construction delays mounted. Disputes intensified over terms of the lease.

The Parking Authority moved workers to the Lot 9 office building last year — only to shuffle them out less than a month later due to unresolvable plumbing problems. Some of the rehab was performed without needed permits and inspections, according to the city’s Department of Licenses and Inspections, and as a result the office building does not hold the required certificate of occupancy.

Last week, the PPA board abruptly moved to fire Petri amid concerns over the agency’s finances and management, and after the newspaper began asking questions about Lot 9. (He resigned before the board officially voted to terminate him.)

News of the failed project and Petri’s ouster comes amid other signs of financial turbulence at the state-controlled Parking Authority. Philadelphia International Airport is seeking to take control of the PPA’s lucrative parking operation, which the authority has been run for nearly half a century. And City Council intends to probe the agency over an $11 million debt it lodged against the city’s cash-strapped School District, claiming it had overpaid the schools years ago.

Lot 9′s renovations came from ticketing and towing proceeds, known as on-street parking revenue. It is the same revenue stream that determines how much the PPA pays the city and School District each year.

Officials from both the city and School District said they were previously unaware of the Lot 9 expenditures, which likely reduced the amount they were to receive, until briefed by The Inquirer this month.

And now, elected officials are asking whether the PPA sank millions into a white elephant — a once-promising investment that turned out to be a money pit.

“We need a full investigation to understand whether this latest financial mishap is the result of malfeasance or just monumental stupidity,” said Councilmember Helen Gym, who called for the PPA probe last month. “This is no longer about the School District. This is about the city’s revenues as well.”

“This type of thing is indicative of the fact that the PPA isn’t accountable to any city or state oversight,” said City Controller Rebecca Rhynhart. “There’s no transparency and accountability around what they spend.”

Last June, the PPA launched a suit against developer-owners Sean Frankel and George Manosis, as well as their companies. But the agency has yet to file a complaint detailing its allegations and how much money it is trying to recoup.

PPA spokesperson Martin O’Rourke would not answer questions about the aborted project, citing the lawsuit. He also declined to elaborate on the reasons for Petri’s dismissal, beyond calling it a “personnel issue.”

‘What is wrong with these guys?’

In 2019, Petri informed the PPA of a problem: The lease was expiring on the authority’s longtime impound and auction facilities along Delaware Avenue in South Philadelphia. The solution, he said, could be found in the shadow of the decaying power plant, nine miles up the river.

The authority eventually secured 16 acres that wrapped around the Richmond Generating Station, a century-old steam plant shuttered in 1985. The multilease deal included parking lots, a warehouse, and half-renovated utility building. And the PPA would pay the owners — who had just bought the land from Exelon for $2 million, according to property records — to rehab the buildings.

Construction moved ahead, even as the pandemic gutted parking revenue, and PPA officials were optimistic that Lot 9 would be up and running within months.

Emails show Petri was involved in nearly every decision, from scheduling contractor visits to picking the types of office chairs that would outfit the new building. He sometimes acted as a construction foreman, dictating day-to-day errands via email. Take cans of spray paint to the site, he instructed an aide one morning.

Tensions soon appeared to build with Frankel and Manosis, the owner and developer. In June 2020, PPA officials were irate when they found out they had to draft a new lease because the landlord had put the wrong company name on the original document.

“Who the hell makes a lease in the name of an organization that they think ‘does not exist’?” PPA general counsel Dennis Weldon wrote to Petri. “What is wrong with these guys?”

Weldon, who assumed Petri’s director role last week, declined to comment. Through their attorney, Frankel and Manosis also declined to comment.

When the PPA moved people onto the site in spring 2021, there were some hiccups. Impound workers were reprimanded for taking lunch breaks outside the authority’s leased property at the former power plant, emails show. Employee punch clocks were buggy.

But bigger problems began leaking into plain view — in the office bathrooms, specifically.

Plumbing lines were backing up into the facilities, particularly in bad weather, according to Gordon Zimmitt, president of AFSCME Local 1637, the union that represents PPA impound lot personnel.

“Whenever it rained, it didn’t drain properly,” Zimmitt said. “It had something to do with the ground it was built in.”

PPA officials installed temporary bathrooms outside by the guard booth. Soon, however, they became so worried about “growing issues with the plumbing at Lot 9,″ emails show, that they scaled the staff down to a skeleton crew.

Zimmitt said workers were on site for only a few weeks: “Once they realized they couldn’t fix it, they moved them out.”

PPA officials quickly began dismantling the entire operation, rerouting employee phone lines and ferrying office equipment back to other PPA lots.

“We have had several issues at [Lot 9] which has essentially put the project on hold,” a PPA deputy wrote to a vendor, attempting to cancel a contract for security equipment.

It remains unclear whether the plumbing issues that rendered the space uninhabitable were a construction flaw or part of a larger infrastructural issue.

After reviewing construction invoices provided by The Inquirer, the Department of Licenses and Inspections said some of the work appears to have been performed without proper permits and inspections. L&I spokesperson Karen Guss said inspectors had not visited the property since construction began in 2020. The building would also require a new certificate of occupancy, but because no work was inspected, the certificate has not been updated.

“L&I could move to cease [operations at] the property if the uninspected renovations have brought the safety of the property for use as an office building into question,” Guss said.

Tapping the ticket money

The PPA has offered no timeline for returning to the site, where the authority is two years into a minimum 10-year lease. City Hall wants answers.

The total bill for Lot 9 is likely higher than the $3.6 million outlined in financial records, as those figures do not include moving expenses or other costs that may have been incurred by the abrupt relocation. (Sources familiar with the project said the $44,000-a-month rent is on hold while Lot 9 remains closed.)

Under a 2004 deal that solidified Republican control over the PPA, the city receives a fixed amount of on-street revenue each year, after the PPA’s operating expenses are covered. Any profit on top of that goes to the School District.

Before the pandemic, on-street parking revenue soared to $148 million in annual revenue at its peak — a boon for the city and School District. In 2018, the authority paid the district about $15 million.

But the profit share with city schools ground to a halt when the pandemic hit. The PPA said it didn’t have a dime left for the School District that year, even as it withdrew millions to finance Lot 9.

Kevin Lessard, a spokesperson for the city, said officials in the city’s Finance Department “do not recall nor have any records showing PPA informing us of these expenditures.” Uri Monson, chief financial officer for the School District, would not comment on the project itself but said plainly that the timing of the expenses spelled a loss for the district, which has a $3 billion annual budget.

“Any dollar that went to this was a dollar that would have gone to the schoolchildren of Philadelphia,” Monson said.

Nawn, the former CFO, who left the PPA in March 2020, said the PPA’s spending was appropriate because the authority is allowed to use on-street funds to finance projects that contribute on-street revenue. He said the impound site was an investment that would see long-term returns.

“That’s land we get to control for the next 10 to 20 years,” Nawn said, noting that the PPA board signed off on the expenditures. (PPA board chairperson Beth Grossman declined to comment; her predecessor, Joseph Ashdale, who was on the board until August 2021, did not return calls from The Inquirer.)

The Parking Authority only briefly mentions Lot 9 in its financial statement for fiscal year 2021, which includes a footnote about the project’s litigation, noting that investments “have been capitalized until the property is potentially placed in service.”

Regarding the ongoing dispute with the School District, the PPA claims the debt stems from its own miscalculations about a $34 million pension plan that PPA established to pay retiree health benefits. Weeks before Petri’s ouster, Monson had asked the director to provide more evidence as to why the district needed to return more than $11 million to the on-street coffers.

Rhynhart, the city controller who oversaw a 2020 audit of the authority, said Lot 9 reignites questions about the potential misuse of parking funds and the need for structural change.

“What has been shown time and time again is there needs to be more scrutiny, more accountability,” Rhynhart said. “Right now, this type of spending, while disappointing, is not necessarily surprising.”