Philadelphia Convention-Center Spending Resolves Little.

Knight Ridder/Tribune Business News March 14, 2003 By Marcia Gelbart, The Philadelphia Inquirer Knight Ridder/Tribune Business News Mar. 14–The Convention Center has no chief operating officer, but so far it has spent $88,000 to find one.

The center has also yet to broker a labor pact to cut union costs, but has paid $309,000 to a prominent Center City law firm for legal advice toward those efforts.

Those are some of the $1.6 million worth of expenses associated with the Convention Center Authority’s efforts, since 2001, to stamp out the labor and management turmoil that is driving away business vital to Philadelphia’s tourism economy.

“I knew the number was up there,” Albert Mezzaroba, who has sat on the center’s board since 2000, and last month was named chief executive officer, said this week. “When you look at $1.6 million, and we still have a reputation of not being a labor-friendly city, yes, it’s upsetting.” The center is a publicly owned building whose debt service and operating deficits are covered by the city, which means Philadelphia taxpayers. Last year, the shortfall was $13 million.

The city has had to absorb these costs as it struggles to balance its budget. Just 11 days ago, Mayor Street said 50 senior government positions would be eliminated to save $4.2 million a year in salaries and benefits.

All the expenditures occurred under the leadership of a board that included both state and city appointees, as well as Republicans and Democrats. in our site philadelphia convention center

George Burrell, the mayor’s senior aide, argued that the money would have produced better results if state Republicans had not crafted a law altering the center’s governing structure.

“Unfortunately, because of the Republican intervention, we are ultimately going to have to spend more money to solve this problem,” Burrell said.

Democratic City Councilman Michael Nutter, whose chairmanship of the board is pending in a city lawsuit to overturn that state law, said: “You will never escape the premise that you have to spend some money to make some money.” “If the Convention Center does what it needs to do to change its image, to have true labor peace, then [this number] will pale when compared to the return on the investment,” said Nutter, whose chairmanship is backed by Republicans. “We won’t know until you have a final result.” Meanwhile, bills are still coming in.

Judith Harris, a lawyer with Morgan Lewis Bockius L.L.P., has submitted fees and expenses totaling $18,910 for her work in defending the authority in the lawsuit. That doesn’t cover all her work to date, and the suit isn’t yet over.

Unlike Harris’ fees, many of the $1.6 million in costs were anticipated by the board.

For instance, in January 2001, the authority approved a labor agreement that created a position, called “site representative.” And when William Corazo, a union business agent for electricians’ Local 98, was appointed to that job, the center agreed to pay Corazo his same union salary and benefits.

From February 2001 to February 2003, that figure came to $347,431. He was paid through an electrical contractor, Elliott-Lewis Corp., so he could preserve his union pension.

The board had also expected to cover costs for the Philadelphia Area Labor-Management Committee, a nonprofit organization that, as a result of the labor agreement, was charged with overseeing the agreement’s implementation. The group’s fees, at $150 an hour, totaled $297,960. Almost half that figure was for the group’s work more than two years ago in helping to draft that agreement in the first place.

Despite those expenditures, what was not expected — by board members, the mayor, or the trade unions — is that the agreement would not sufficiently curtail jurisdictional disputes, and that another agreement would become necessary. web site philadelphia convention center

In February 2002, to better assess the center’s problems, the authority hired a consulting group that would eventually be paid $235,509. That group, Econsult Corp., produced a study that led to the basis of a labor pact that was proposed in August.

With just five of six unions signing on, the center began seeking additional labor advice on legal issues from its outside counsel on how to engage the lone holdout, the carpenters’ union.

Meetings with the counsel, Barry F. Bevacqua of Blank Rome L.L.P., intensified throughout the fall as he aided efforts to reach labor peace, with final expenses totaling close to $309,000.

Meanwhile, with all the focus on labor, efforts to hire a chief operating officer, which Econsult recommended, had been pushed aside. But the search firm, Heidrick & Struggles, had identified candidates, ringing up costs close to $90,000.

Similarly, until Mezzaroba’s appointment last month, little progress was made in finding somebody to fill the vacant CEO job. As a result, the man holding that position in the interim, Robert Williams, stayed on longer than the board had intended, eventually earning $213,809 in consulting fees and expenses.

“In retrospect, I don’t think anyone was looking to waste money, or paper [the problems] over,” Mezzaroba said. But, in his opinion, the money could have been better spent if the board had taken a more comprehensive approach from the beginning to tackling issues at the center, especially complaints about high costs.