Philly City Council probes ‘financial chaos’ at the PPA

City Council launched a series of hearings into the Philadelphia Parking Authority on Wednesday, amid ongoing financial scrutiny into the agency’s operations and the abrupt ouster of its executive director.

Council members spent three hours grilling PPA officials about an array of recent issues at the state-controlled parking authority, from a controversial debt it lodged against the School District of Philadelphia, to a failed real estate development, to long-standing flash points like patronage hires and bloated executive compensation.

City Councilmember Helen Gym, who led the hearing, said her hope was for Council to secure approval power of the authority’s budget. Unlike other government bodies, the PPA does not have its annual budget approved by lawmakers. Rather, the agency’s board sets its own budget.

“We are no longer going to tolerate the financial chaos and questionable expenses of this entity,” Gym said.

In occasionally tense exchanges with lawmakers, PPA board chair Beth Grossman, who took the agency’s helm in September, said the authority is committed to transparency and cooperation with both the city and school district.

With a slate of new board members and a shake-up at the executive level, she said the agency plans to overhaul its financial operations and ultimately generate more revenue for the city and school district, among other reforms.

“PPA’s new board knows we have to go the extra mile,” Grossman said.

At center stage in the hearing was the parking authority’s annual payments to the city and school district — a promise baked into the 2004 Republican takeover of the parking authority. Under that deal, the PPA agreed to pay a fixed amount of its annual ticketing and towing revenues to the city, and give the leftovers to the school district.

While the PPA has paid about $557 million to the city and $132 million to the district to date, Gym said those figures remain far below the initial projections.

“This is an agency that remains far, far from its mission,” she said.

The PPA spent six months locked in a dispute with the district over a $10.8 million “overpayment” it had claimed it made to the school district years prior. The issue was resolved last month with an agreement to cancel the debt.

Despite the agreement, school officials testified to ongoing transparency and communication issues over the PPA’s annual funding obligations to the perennially cash-strapped district.

“More challenging is the lack of information from the PPA,” said Uri Monson, the CFO who oversees the district’s $3 billion operating budget. “We need to have a sense of what’s likely to happen.”

Grossman noted that annual increases to the city’s allocation have cut into the school district’s allotment, and that the authority is still recovering after two years of pandemic-battered parking revenues.

The PPA hired a national recruiting firm to replace former executive director Scott Petri, who the board forced out in March. This month, the agency also terminated its chief financial officer Belinda Smith. Grossman said an interim CFO, whom she did not name, will take over within a few days, and declined to elaborate on the circumstances of Smith’s removal. The PPA plans to retain a third-party agency to assist the new financial planning, she said.

Gym also zeroed in on the financial disaster at “Lot 9″ — a Petri-led effort to develop a swatch of riverfront industrial land into a new parking headquarters. An Inquirer report in March revealed that numerous problems rendered the site uninhabitable, and led the PPA to pull its workforce out weeks after moving in last year. The PPA settled litigation with the developers and owners in April, but the failed project ultimately cost the PPA more than $1 million.

Speaking publicly on the Lot 9 debacle for the first time, Grossman did not say how the project was funded but insisted it did not involve money from the on-street parking fund that is tied to city and school district payments — a statement contradicted by interviews and financial records obtained by The Inquirer.

The hearing is the first in a series that will probe financial documents subpoenaed by Council, though Gym said documents provided by the PPA ahead of the first hearing were “incomplete.”

PPA officials noted that the authority has complied with recent audits from state and local entities. But unlike other government agencies, the PPA does not require legislative approval of its budget.

Grossman said that the authority retains third-party accounting groups to conduct audit the agency’s books each year. Councilmember Jamie Gauthier pushed back, saying she did not consider any group hired by the PPA itself to be “independent.”

“That’s not independent,” Gauthier said. “That’s just a matter of fact.”

The hearing also touched on long-standing issues of bloated executive salaries and rampant patronage jobs — two issues highlighted in the 2020 audit conducted by City Controller Rebecca Rhynhart, as well as numerous media reports over the years.

Grossman declined to comment on the executive pay scale or discrepancies among lower-paid parking workers, but insisted that the new board is addressing the issues.

“To think that I neglected this or I’m not concerned, that is not so,” Grossman said. “I don’t want it to be a place of patronage.”