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Released: 2/17/2009 

DRPA’s Response To Investment In Economic Development Projects

In response to correspondence regarding the Delaware River Port Authority’s investment in economic development projects aimed at enhancing the communities within the DRPA Port District, the DRPA provided the following:

The DRPA has been targeted for criticism by opponents of the economic development grants, and for this reason we think it is important to explain a bit of the history of this program, as well as the DRPA’s purpose and the rationale behind our decision to fund them.

First, it is important to understand that the DRPA did not arbitrarily decide to select economic development projects and provide funding for them.  To the contrary, the DRPA’s amended Charter authorizes the Authority to actively engage in economic development throughout the DRPA Port District as defined in the Compact, on the theory that in doing so, the DRPA not only fosters an improved quality of life in our host communities, but also generates increased bridge crossings and boosts transit ridership.  The charter was amended through an open and public process in 1992, and the amendments authorizing this policy were approved by the Legislatures in New Jersey and Pennsylvania; by the Congress of the United States; and by the President.  Economic development activities are part of DRPA’s mission, a mission that was reviewed and endorsed by elected representatives at the state and federal levels. 

Using the proceeds from bond issues that were approved by representatives from both states, the DRPA engaged in economic development activities totaling approximately $340 million between 1999 and 2003.  These grant funds played an important role in supporting a wide variety of projects that were important to the continued economic viability of the DRPA Port District.  In recent years, however, the Authority has greatly reduced the number and amount of its economic development activities at the direction of the governors of both states with the full support of the DRPA Board and the Chief Executive Officer.  And in announcing the DRPA’s decision to embark on the critically important capital repair program for the Authority’s facilities, we committed that no proceeds from the toll increase enacted September 2008 or future toll increases would be used for economic development activities.  That remains true.  The DRPA made it clear, however, that the $35 million remaining in economic development funds would continue to be available, albeit on a much smaller scale, for economic development purposes.  Some of these awards involve projects for which the DRPA long ago committed funding, and more recently, approximately $11 million in grants were announced to support several key, transit-related projects that are vital to the region.

We believe that these projects are necessary and appropriate, and let me explain why.  While we fully recognize the sensitivity of local commuters to the use of this money for economic development at a time when bridge tolls are increasing and the economy is in turmoil, it is important to place these awards into proper context.  First, all of the $11 million will go to projects that are vital to the future of our region and our ridership.  These funds support infrastructure improvements in Camden that will prepare the way for a proposed medical school at the site, immediately adjacent to the PATCO station there.  Other projects support infrastructure improvements to the Gateway Corridor that will likewise attract new business and jobs to the area, but also motorists traveling to DRPA bridges and passengers on the PATCO High Speed Line.  And on the Philadelphia side of the Delaware, the projects support the completion of the President’s House, perhaps one of the most important historical developments in our region since the development of Independence Mall more than 50 years ago.  What the critics routinely discount, however, is that these projects also are likely to generate significant new trips across our bridges and on our trains.  In the summer of 2007, when the President’s House project was little more than an open excavation pit, more than 300,000 people came to witness the compelling history that was being unearthed at the site.  We are convinced that, in addition to being an extremely worthwhile historical project, the President’s House and other tourism-related awards in the Philadelphia Historic District are worthwhile transit-related projects that merit DRPA support.  We are confident that the Authority’s investment in these projects will generate increased toll and transit revenues for years to come.
 
Secondly, in response to critics who argue that these funds should be used solely to defer toll hikes or reduce the impact of “growing DRPA operating costs,” we must respectfully disagree.  It is important to understand that the Authority’s capital improvement program is simply unavoidable if we are to maintain the safety, security, and serviceability of our bridges and the PATCO High Speed line.  Put simply, even if every penny of the remaining $35 million in bond proceeds were diverted to the capital program, it would not reduce the size of the bond issue needed to fund the program, nor would it reduce or eliminate the need for the toll increases that are being implemented to fund it. 

And while it certainly makes great copy to argue that DRPA’s costs are rising, the fact is that the DRPA’s budget growth has been essentially flat for the last five years, because the Authority has worked hard to restructure health care and retirement costs, cut more than 125 jobs, streamline our E-ZPass processing system, and strictly curtail travel, sponsorship, and equipment purchases.  We are committed to squeezing every nickel of waste from DRPA’s operations, and we have already made tremendous progress in this regard.

We realize that this response is perhaps far more detailed than you might have expected, but we believe it is important to explain the DRPA’s reasoning behind the economic development decisions, and its impact on the Authority’s operations and the coming capital improvement program.  In the next five years, these funds will pay for dramatic improvements to our bridges, provide significantly enhanced security for our facilities and long-overdue renovations to the aging fleet of 121 PATCO train cars, and lay the groundwork for a major expansion of PATCO service into several South Jersey counties.

We thank you again for taking the time to share your views with the DRPA, and we hope that this response provides you with a better understanding of the Authority’s position with respect to these important issues.


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