April 24May 1, 1997
A Sterling Opportunity
By Scott Farmelant
Second in a series
Down on the Delaware, a football field south of the Ben Franklin Bridge, an office sits inside the waterfront's first-ever mixed commercial and residential development. There, the executives and officers who run Penn's Landing Corporation (PLC) combat the blight which continues to define the thoroughfare recently renamed after Christopher Columbus.
To that end, the PLC restored the Penn's Landing Heliport in 1995 for nearly $1.8 million. The facility, located at the corner of Catharine Street and Columbus Boulevard, is the most tangible evidence of PLC's presence on the waterfront.
More to the point, the heliport is a testament to the power of State Sen. Vince Fumo, a PLC board member who was instrumental in securing funds for the project. Backed by Fumo's clout, Jack Brown, owner of Sterling Helicopter and secretary for the PLC's board of directors, saw the small facility which houses his chopper business blossom into a three-story office complete with a new hangar and showroom.
Beyond Fumo, Brown owes a debt of gratitude to the public who frequent the Ben Franklin, Walt Whitman, Betsy Ross and Tacony-Palmyra bridges (among others). At $2 per trip, bridge commuters and other travelers funded the $2 million Delaware River Port Authority (DRPA) grant which paid for the heliport restoration.
Brown should also thank his fellow PLC board members and PLC President Dominic Sabatini. After all, it was the PLC which hired an architect, a project manager and a contractor to redo the heliport, firms with some connection to Fumo. In fact, Fumo a regular flier aboard Sterling is linked to many of the players who made the heliport project a reality.
The PLC, without soliciting bids, enlisted architect Louis DiGregorio and project manager Gaudet Associates to design and manage the heliport project. DiGregorio, who donated $5,000 to Fumo's Senate campaigns between 1992 and 1995, received $149,500 for his services. In addition, the PLC's 1994 annual report shows that DiGregorio received $38,787 for "design services." The report does not indicate why the PLC paid DiGregorio that money.
DiGregorio is the architect who later worked on the remodeling project for Fumo's Green Street mansion.
Gaudet Associates is a consulting firm which once rented offices on Pier 5, which is run by the PLC. Gaudet managed the heliport project for an $83,000 fee. Joe Gaudet, the firm's former owner, donated money to Fumo's campaigns, a total of $850 between 1992 and 1994.
Miri Construction, owned by South Philadelphia businessman Michael Mezzaroba, won the right to build new offices, a hangar and a showroom for Sterling with a low bid of $1.5 million. Fumo later hired Miri as the lead contractor on his home rehab project. According to PLC records, Miri's bid on the heliport exceeded the initial cost estimate by at least $300,000, or 30 percent,though it was $80,000 lower than the next bidder.
Beyond Fumo connections, there is the matter of Sterling's rent, which the PLC collects for the company's use of the heliport. The PLC won't say how much Sterling pays to lease the facility. Before construction was complete in 1995, Sterling paid $1,918 per month in rent.
In fact, the PLC, a quasi-public agency, chose not to answer any of City Paper's questions. Once the PLC provided the company's annual Internal Revenue Service reports and bidding documents connected with the heliport as required by law, it cut off all communication.
"The directors, officers and staff of the Penn's Landing Corporation have elected to decline any further interviews with... any member of City Paper," read the statement issued by Joseph Kessler, an attorney with Dilworth, Paxson, Kalish & Kauffman, on April 8. "The Penn's Landing Corporation has fulfilled its applicable legal requirements in providing you with access to applicable documentation."
The law firm Dilworth, Paxson, Kalish & Kauffman shares a link with Fumo. That's where the senator keeps an office under the heading "of counsel." Kessler says Dilworth Paxson began representing the PLC in January 1994, eight months after Fumo joined the law firm.
Photo by Julia Lehman.
Pier 3, home of the Penn's Landing Corporation.
Bid documents show and three sources say that Sabatini, a former Department of Licenses and Inspections commissioner in the mid-'70s under Mayor Frank Rizzo and reportedly a Fumo confidant, was the point person on the Sterling rehab project.
"Dominic Sabatini was the one involved in the details of [the Sterling] project," said Stanhope S. Browne, president of the PLC board.
"The Penn's Landing [Corporation] folks were the people in charge of the heliport project," added Martin Dorph, the DRPA's former treasurer and director of finance who now works for Temple University. "They were the ones who really knew what was going on."
In fact, sources report that Sabatini was familiar with Sterling's operations and occasionally flew on the company's helicopters. Jerry Schmidt, a former pilot and director of operations with Sterling, notes that he flew Sabatini, Fumo and two other men to Baltimore on a Sunday in 1991. Schmidt says the four men inspected the tall ship Gazella, then under reconstruction.
Sabatini, who earned $181,480 in pay along with $73,354 in benefits during the PLC's fiscal year 1995, did not return several phone calls from City Paper seeking comment on the PLC's involvement in a project which directly benefited one of its board members. Neither did Sen. Fumo.
Sabatini has spoken about the Sterling project. In the Inquirer's "River of Money" series printed in November 1995, Sabatini defended hiring DiGregorio without a bidding process. According to a Nov. 15, 1995, Inquirer article, Sabatini said that he did not solicit other architects and did not know DiGregorio "but liked his ideas and his willingness to accept a modest 7 percent commission." The Inquirer article reported that Sabatini "needed an architect" once the DRPA approved the funding. Sabatini said that "DiGregorio called to pitch a design and was hired."
Two PLC directors, Stanhope Browne and Gustave Amsterdam, say the PLC hired the architectural firm Agoos & Lovera to design Sterling's exterior, a collage of clouds, sun and moon.
"George Lovera ended up being the principal advisory architect," says Browne.
None of the PLC's records on the Sterling project listed any payments to Agoos & Lovera. Nor did the records list any payments to O'Donnell & Naccarato, an engineering firm which performed work on the heliport project, according to documents. George Lovera did not return calls seeking comment. Neither did Bill O'Donnell, a principal in O'Donnell & Naccarato.
Because PLC officials refused to answer City Paper's questions or grant any interviews, there is no way of knowing whether Agoos & Lovera or O'Donnell & Naccarato were paid as subcontractors on the project or whether they received funds which would boost the heliport project's overall cost beyond the $1,780,311 project cost reported by the PLC.
However, the PLC's annual reports show that Agoos & Lovera has received at least $344,800 since 1992 for design services. None of the PLC annual reports or Sterling records list any payments to O'Donnell & Naccarato. But the firm's principals, Bill O'Donnell and Peter Naccarato, do have a connection with Fumo. The pair have made several donations to the senator's campaigns between 1992 and 1996 which totaled $7,125.
Despite the clear possibility for conflict within Brown's dual role as PLC director and Sterling owner, three fellow directors denied any form of self-dealing in the project.
"We always kicked Jack out of the room when we discussed these things," says Stanhope Browne. "We were very aware of his interest and we always excluded him from discussions."
"The board has always been very proper in paying attention to any kinds of conflicts," adds James Eastwood. "We observed all safeguards" on the Sterling project.
Amsterdam, the vice president of the PLC board, also said Brown recused himself from discussions and votes.
None of the three men could recall when the PLC first discussed the heliport project. They also could not remember who suggested exploring the idea.
"No, I don't recall one single thing," says Amsterdam. "I must say I don't have a recollection of that one at all."
"I don't remember who brought it in," adds Eastwood.
Although Brown recused himself from PLC board decisions regarding Sterling, sources say he actively planned for the reconstruction well before the DRPA board funded the project.
Jerry Schmidt, Sterling's former director of operations, says he sat in on several meetings in the winter of 1992 and early months of 1993. There, Schmidt says Fumo, Sabatini and Brown met at Sterling to discuss ways to finance the heliport project.
"There were several meetings," says Schmidt, who left Sterling in March 1993. "There was one right in the hangar."
Bid documents from the Sterling project also show that Brown received copies of correspondence related to project developments as matters moved forward.
In mid-March, Brown's secretary told City Paper that the Sterling owner was out of the country for several months and could not be reached for comment. When City Paper attempted to contact Brown on April 21, a secretary reported that he was no longer on vacation. Brown, however, did not return the call.
As for the hiring of DiGregorio, none of the PLC directors who spoke with City Paper understood how he was hired or why.
"I can't explain that," Eastwood says. "Most of the work we've had down there, we used the [open bid] process."
"I don't know why we hired DiGregorio," Browne adds. "Maybe he's a good architect. I don't know."
In the face of questions surrounding Brown's and DiGregorio's roles, plus the 1995 Inquirer article which questioned the need for a publicly funded heliport, Eastwood and Browne defended the deal.
"If we believe that a heliport is a good idea... and we don't let [Jack Brown] sit on our side of the table, what's the problem?" asks Browne.
"The purpose of the project was for the betterment of what goes on in the city," says Eastwood.
Eastwood noted that, from the "the perspective of future development on the waterfront," PLC officials hoped the heliport would serve as an attractive and inviting gateway for out-of-town guests and business leaders.
Sabatini also defended the project in the 1995 Inquirer article. Though Sabatini told the Inquirer that the heliport went ahead without any "formal study," he referred to information which the PLC gave to the DRPA in support of the project. As the Inquirer reported, the PLC report said that "recent studies indicate that helicopter usage will show significant growth over the next decade." The Inquirer article also reported that the PLC possessed a 1988 study which projected "an increase in helicopter use of one or two percentage points a year." The article noted that "the vast majority" of large companies surveyed for the 1988 study showed "no interest in using helicopters."
Several area pilots who spoke with City Paper say there is little need for a heliport in Center City. The pilots note the city is already serviced by heliport operations at the Philadelphia Airport, the Northeast Airport and a third in Blue Bell. And there are several others in South Jersey.
The pilots say that safety and noise are two more reasons why the riverfront is a bad place for a heliport. As proven by last week's fatal helicopter crash in Manhattan's East River New York City's sixth crash since 1985 there is an inherent risk factor with chopper usage. Indeed, Sterling pilot Joe Paruszewski crashed a helicopter in Pittsburgh on Feb. 17 (neither Paruszewski nor two filmmakers were hurt when the pilot somehow sheared off half of his craft's tail rotor, then crashed the chopper into the Youghiogheny River). In addition, Sterling does not have on-site firefighting personnel or equipment, but Engine 3, located at the corner of Washington and Moyamensing Avenues, is less than two minutes away.
As for noise, several studies show that a helicopter flying at an altitude of 1,000 feet makes as much noise as an alarm clock does at a 10-foot distance.
"The question about Sterling is, 'Do you want to use prime real estate on the Delaware River for a heliport?'" asks Harry Ettenger, a pilot who used to fly WPVI TV's Chopper Six, which is based at Sterling. "Is that the best use for the city?"
Eastwood disagrees with the pilots' view.
"If you want to make the city a destination, wouldn't it make sense to bring people in by any way you can?" Eastwood asks. "If I see Philadelphia's waterfront developed the way I want it, that's where I want [a heliport]."
Aside from the Sterling project, the PLC is moving forward with plans to develop "Project X." Just last week, the Inquirer reported that the $75 million project will take form as an "urban entertainment center," including movie screens, a 3-D screen, a Discovery Channel store, theme restaurants and a theme park linked to children's literature.
To that end, the DRPA board gave the PLC $5 million in December 1993, money that was part of $19 million in DRPA grants. With Fumo's support, the PLC secured the funds which were specified for use on various projects. (According to DRPA minutes, Fumo abstained on all votes related to the PLC grants except for the $5 million for Project X. Fumo voted in favor of that grant.)
PLC records show the agency had $15.3 million of the $19 million in DRPA cash available on June 30, 1996. That means the PLC has spent $1.9 million in DRPA grant money beyond the $1.78 million heliport expense. PLC records do not specify what the corporation did with the $1.9 million.
The PLC board oversees all of the corporation's expenses. And that board is stocked with political players Mayor Ed Rendell, Fumo, Council President John Street and Managing Director Joe Certaine all are "ex-officio" directors (so are Ben Hayllar, the city's finance director, and Commerce Director Stephen Mullin). But three directors chairman Stanhope Browne, Gustave Amsterdam and Jack Brown oversee board matters.
Judging by the four annual reports City Paper examined, the three directors have watched a Sabatini-led PLC spend significant sums of money.
For example, the company paid its officers (including Sabatini, and two vice presidents, James Cuorato and Joe Brooks) handsomely in fiscal year '95, a total of $517,088 in "compensation." Sabatini topped the list with a compensation package worth $254,834 twice what Rendell is paid as mayor ($110,000 in salary, plus $17,000 in benefits). As evidenced by the PLC annual reports, the PLC board has been very pleased with Sabatini's performance, rewarding him with three pay increases in four years. Sabatini's fiscal year '92 salary was $100,000 plus $37,000 in benefits.
Brown, as a PLC board member, would be in a position to vote on Sabatini's pay hikes. Again, the PLC would not say whether Brown voted on the pay hikes and whether that formed a conflict given Sabatini's central role in the heliport expansion.
In addition, the PLC spent $187,101 in "compensation to officers and directors." The PLC's annual reports state that directors do not receive any compensation for serving on the board.
All told, the PLC spent $1.6 million on employee salaries in fiscal year 1995, some 23 percent of the firm's $7 million in revenues.
During the four-year period, the PLC grew from a $3.8 million-per-year outfit in 1991 to $7 million in revenues for fiscal year 1995 which ended June 30, 1996. The company had $4.5 million in surplus funds last June 30.
During those four years, the PLC spent millions on construction, design and legal fees. In addition, the PLC spent $513,300 on "professional services." The expenses were not detailed in the records.
Construction topped the PLC's spending list for the four years at $4.6 million. Miri received the largest portion of those funds. The PLC also spent $1,265,200 on architects and engineers and $783,000 on outside legal fees.
At least two of the private firms which benefited from PLC spending are donors to Fumo's campaigns.
Urban Engineers, which has offices in Old City and on the northern waterfront, received at least $695,700 in PLC funds. The company's president, Edward D'Alba, has donated $8,550 to Fumo's Senate campaigns since 1992. Three other executives with the firm donated an additional $2,450 during that period. And Dilworth Paxson, through managing partner Joe Jacovini and the firm's political action committee, has donated $7,000 to Fumo's campaigns between 1992 and 1996.
Stanhope Browne and James Eastwood say Sabatini decided to hire Dilworth Paxson as the PLC's legal counsel in 1993 after "conflicts" forced the law firm Drinker, Biddle & Reath to step aside.
"It was Sabatini's idea to hire Dilworth, approved by the board," said Browne.
"Dominic hired Dilworth... probably because we had a lot of confidence in the firm," says Eastwood. "And Joe Jacovini has great knowledge of the waterfront."
Regarding Dilworth Paxson's compensation, Kessler disputes the PLC's fiscal year 1994 annual report which says the firm received $353,488. Kessler says the report is "erroneous" and lists the firm's earnings from the PLC fiscal year 1994 as $28,380 for work performed between Jan. 10 and June 8, 1994.
Kessler also says Dilworth Paxson earned $103,247 between August 1994 and May 1995 for work on a variety of projects, including legal matters related to the heliport.
The PLC board also shows several directors who've donated to Fumo campaigns. Jack Brown donated $16,250 to Fumo campaigns between 1988 and 1995. Alan Hoffman, president of the Vitetta Group, which rents an office from the PLC, gave Fumo's election efforts $11,400 between 1992 and 1996. Eastwood gave Fumo's campaigns $10,300 in the same period while Paul Fera, a consultant hired by the PLC, contributed $3,500.
Last Week: What's the deal with the senator and Sterling Heliport?