DRPA Chief Calls Reform Bill ‘Not Transformative,’ Says Changes Already Made

Jon Hurdle | May 6, 2014 | More Issues
Pending bill calls for increased transparency, more responsible management of toll revenues by Delaware

Would the Norcross company have moved to Philadelphia?
The Delaware River Port Authority needs to do a better job of regaining the public trust, which has been eroded by claims of mismanagement and profligate spending.

But its acting chief executive believes it is already pursuing some of the policies being proposed in new legislation to reform the embattled agency.

John Hanson said the agency, which operates four bridges across the Delaware River between South Jersey and Pennsylvania, as well as the PATCO subway line and a ferry, had already decided in 2010 to end its support for economic development projects that the bi-state legislation says are outside its mandate.

“This legislation is not particularly transformative,” Hanson said, in response to a bill introduced in both states’ legislatures calling for a ban on DRPA’s involvement in economic development, to prevent what critics have called an inappropriate use of toll-payers money.

The bill, introduced in New Jersey by state Republican Sen. Joe Pennacchio on April 28, also seeks to end what its backers see as cronyism that has led to lucrative contracts for people connected to the agency. If it is passed by both state legislatures, the bill must also be approved by Congress.

Proposed reforms include bans on political activity using DRPA time or resources; on the acceptance of any gifts that could affect the conduct of the agency’s business; and on DRPA managers receiving their salaries before audits are complete.

Sen. Pennacchio and cosponsors in Pennsylvania said the agency spent more than $440 million over two decades on development projects unrelated to its transportation mandate, and incurred “significant debt” to do so.

And they accused it of spending lavishly on “outlandish” expenses for officials and employees. Examples included spending $3,400 on Manhattan hotel rooms for the deputy chief executive to attend a holiday party, and diverting 79 percent of funds earmarked for social causes to organizations that were linked to DRPA officials.

Hanson, who has been acting CEO since January, said some of the projects, such as Cancer Institute in Camden, were worthwhile, but he acknowledged that they should not have been paid for with tollpayers’ money.

He agreed with a claim by Pennsylvania Sen. John Rafferty, one of the cosponsors, that DRPA spent “nearly half a billion dollars” on projects that did not benefit its users.

“There was about that much money spent on economic development, and I would say that it is a matter of perspective whether or not the money was wasted,” Hanson told NJ Spotlight. “I believe that most of the projects were very worthwhile projects. However, I don’t believe that this should have been funded through tollpayer dollars. That’s not our role here to worry about funding worthwhile projects.”

While the agency chose to fund some projects starting in the early 1990s, it is no longer in that business, Hanson said. “There’s no new economic development that’s happening at the Delaware River Port Authority.”

After years of criticism, the agency is now recommitting to its role as a steward of important transportation assets, Hanson said. “We hold those assets in trust for the public, and need to behave with the highest levels of care and integrity,” he said.

Hanson would not confirm the existence of a widely reported investigation into DRPA by the U.S. Attorney’s office in Philadelphia, which declined to comment.

“I don’t know anything about it,” Hanson said. “I have not personally received anything related to it, and I’m still in an acting role as chief executive officer.”

According to Sen. Pennacchio, federal prosecutors subpoenaed several DRPA officials and employees in December 2013 as part of the U.S. Attorney’s investigation.

In January of this year, the DRPA was cited by the Federal Transit Administration for failing to keep elevators and escalators running properly for riders with disabilities, and in July 2013, the agency’s former CEO gave raises to some two dozen employees without the required approval of top board members, and against the wishes of Gov. Chris Christie, the Senator said.

Sen. Pennacchio said the bill is designed to improve transparency and accountability at the agency.

“The DRPA must use the people’s money to provide the best possible transportation via its regional railway and four bridges,” Sen. Pennacchio said in a statement. “They are not an ATM to be used for outside development.’

For his part, Hanson confirmed a report that DRPA gave a bond underwriting job to Citigroup Global Markets, whose co-head of Mid-Atlantic public finance is related by marriage to the agency’s general counsel.

But he said the general counsel, Danielle McNichol, was not involved in the selection of Citigroup.

“Danielle McNichol was not involved in any way with the selection of any of the underwriters, and she formally recused herself from any role in the selection process,” Hanson said.

Asked how he will seek to rebuild public trust in DRPA when he formally becomes chief executive later in May, Hanson promised to work more collaboratively with partners and with community groups.

As an example, he said the agency is already meeting at least weekly with PATCO to agree a plan for rebuilding the subway tracks on the Ben Franklin Bridge between Camden and Philadelphia.

“We need to work hard to build public trust and credibility,” he said. “We need to develop a more collaborative approach to the way that we do our work.”