On Friday January 13th, the numbers for last fiscal year ending June 30, 2016 were presented to the members of the WRA (Worcester Redevelopment Authority, click here for video). Please keep in mind the only asset of the WRA operates is Union Station. Total Operating Losses:
- June 30, 2016 $2,338,264
- June 30, 2015 $1,946,089
- June 30, 2014 $1,919,190
The total operating loss was almost $200,000 per month last fiscal year and this was no aberration. The prior two year the operating loss was almost $160,000 per month. As a taxpayer how do you feel about an asset, that you own as a taxpayer, that has an operating loss over $6,000,000 the past three years?
In my column last Sunday in the Worcester Sun, I questioned why the City Council would vote on a petition to be sent to the Historical Commission, that was already on the Historical Commission agenda? In case you missed it, the Historical Commission, click here for the video, voted against this petition Thursday, so it will not being going back to the City Council for a vote after all that. The City Council spent a lot of time on the Mount Carmel Historic District the past two months, and in the end it never got past the Historical Commission. Kudos to the members of the Historical Commission!
My point being the City Council should spend their time on items that have operation losses over $6,000,000 over the past three years, vote issues only when the issue comes to them for a vote that actually has meaning?
Now back to the audit, the WRA is a separate entity from the City of Worcester, but it is in essence the City of Worcester. For accounting purposes the City does not transfer monies to subsidize their operations like it does for Green Hill, which is owned by the City of Worcester. Instead the City of Worcester lends monies to the WRA and charges them interest on the loans.
The interest being charged is not real, however. since the WRA (which again is the City of Worcester) does not actually make an interest payment and merely carries it on the books as accrued interest in the audit. As of June 30, 2016, here are the total loans and accrued interest the WRA owes to the City of Worcester:
- Notes payable to the City of Worcester 8,965,729
- Accrued Interest 2,446,283
- Note payable to the City of Worcester 527,483
- Accrued interest 60,328
- Total owed by the WRA to the City of Worcester 11,899,823
This is not your typical loan either, it is not like the City of Worcester can foreclose on this loan to get their monies, since again the WRA is the City of Worcester. To date we have invested over $9,493,212 (total of notes payable) into the annual operations of the WRA. Let’s forget about the accrued interest.
After investing almost $10,000,000 dollars in subsidies to cover the operations of the WRA, Union Station continues to bleed cash to the tune of of 827,473 (FY16) and 658,122 (FY15). At least maybe we are done with the subsidies? In this upcoming fiscal budget (FY17)), we have $649,702 as a budgeted subsidy, which will end up in another $750,000 cash flow loss.
— masslivenews (@masslivenews) January 20, 2017
But there is more…. We need to spend $6,250,000 on leak remediation and another $10,000 on a study to fix the flag pole. Next time you drive by Union Station, between the subsidy and the negative cash flow, you are looking at $1,200,000 of taxpayer money being invested each year into Union Station.
Keep in mind we are only talking about the annual operating budget and I have not even discussed the annual cost of the bonds that we are paying on the initial $38,000,000 million dollars that we invested to save Union Station. That will be coming.
One other interesting item from the audit was that the City of Worcester has lent another $225,260 to the WRA for Urban Renewal. Can I suggest that before we lend any more money to the WRA for the Urban Renewal Plan, that they need to come up with a plan for Union Station?
In the end I am not saying that saving Union Station was not the right thing to do, but the current operating agreement with the WRA is not working for the taxpayers and we need to come up with some alternative plans. This is no different then the airport when we owned it, before we sold it to Massport. New board member, Tony Tilton, seems to be thinking along the same lines or at least realizes that we need to look into all possibilities, check out meeting at 5 minutes for 1 minute or this class moment or this classic “insolvent” , or “involved” moment at 14 minutes for 1 minute.
These are the types of issues I hope to see being discussed on Tuesday nights at City Hall this budget season, not voting to send petitions to commissions that are already on their agenda. Next week, Part 2 on Union Station.
— Nick Kotsopoulos (@NCKotsopoulos) January 17, 2017