Last week I went over the audit reviewing the annual operating costs for the WRA. Some of the hi-lights from the column, Union Station is Insolvent, included an annual operating losses the past 3 years averaging approximately $2,000,000 per year. How about that the annual subsidies to cover the losses accrue at interest between the WRA and the City of Worcester, which is one and the same, to the tune of $11,899,823. Most importantly the WRA has no chance of paying these loans back based on the current path.
Between the subsidy and the negative cash flow, the cost to operate Union Station costs the taxpayer $100,000 per month or $1,200,000 annual, and there is no change in sight. In fact this may increase when you consider $6,250,000 for Leak Remediation and the costs to repairs flag poles, which will be known when the $10,000 study is done. In other words Union Station is currently insolvent.
The audit only covers the annual operations and not the initial bonds that the City of Worcester issued to complete the $38,000,000 renovation of Union Station. Two weeks ago, the Worcester Herald requested a FOIA (Freedom of Information Act) for the debt schedules relating to Union Station, click here to review.
In July of 2014, the City of Worcester began paying back the total debt of $10,332,251.73 for Union Station. As of February, 2017, the principal outstanding is approximately $5,000,000. Why was the debt to the City of Worcester only slightly more then $10 million, when the total project came in at $38 million?
The remaining debt was covered by the Department of Transportation, which we do not have to pay back as long as it remains a train station. This was the same situation at the airport, when we did not have to pay back much of the debt as long as ORH remained an airport. What if we were to find a buyer who would pay at least $5,000,000 and continue to operate a train station?
Answer: The City of Worcester would save:
$1,200,000 per year in negative cash flow, maybe more considering leak and flag pole remediation
$6,500,000 between and principal and interest on the remaining $5,000,000 in debt
remove a property from the tax exempt property rolls and place it back on the tax rolls
In total, this could potentially save the taxpayer of Worcester $20,000,000 over the next ten years. Think it is far fetched? I do not! Considering the rental income is currently $500,000 per year and the untapped space in the building, we owe it to the taxpayers to at least try.
Please note I am not saying that the idea to save Union Station was a bad idea. I am, however, saying that we have reached the point of diminishing returns and it is time to sell Union Station. A buyer with the ability to maximize the potential of Union Station and stop the bleeding of the taxpayers of Worcester.