Final deal for new Wilmington transit center gives taxpayers less than originally billed

The News Journal | by Karl Baker

Three years ago, Delaware officials celebrated a partnership that was to use private dollars to shoulder most of the cost of a new transit hub next to the Wilmington train station.

Earlier this week, the Wilmington bus hub opened, but not only did taxpayers bear most of its cost, Delaware’s bus agency, DART, must pay $50,000 a year in rent to a private company that today leases the property from the state for $1.

In interviews in 2016 and early 2017, John Sisson, head of Delaware’s public bus agency DART, said a consortium of three Delaware businesses was the sole bidder on the contract for the public-private partnership.

Sisson at that time said the deal would be structured so the businesses would fund the “majority” of construction of the new building, which sat on prime taxpayer-owned land in the core of Wilmington.

While there would be a transit hub on the ground floor, the investors would recoup their money through future profits from businesses, such as a private parking lot, that would operate on the upper floors of the building. After 10 or 15 years, the state could take a cut of those profits, according to the early plan.

At the time, it was the latest proposal to redesign transit in a city where the presence of buses had long been an annoyance to many in the business community.

“We have two demands we’re trying to meet,” Sisson said, then. “Get buses off of (streets) and add more parking.”

In the subsequent three years, the state negotiated a final deal with the consortium, which included Colonial Parking, EDiS Co. and Emory Hill Real Estate Services Inc. Those companies formed an entity, called Transit Center LLC, to act as the legal head of their partnership.

The result this month is a sleek facility on government land that can house more than 10 buses at a time.

It comes after taxpayers paid more than $7 million for the design and construction of the new building and an additional $3 million for an environmental cleanup of the property on which it stands. Transit Center LLC provided about $3 million for the costs, Sisson said in an email.

The state funded most of the project after Transit Center LLC pared back much of its original, more expensive design plans, Sisson said.

In a press release this week, DART called the facility a “$10 million-dollar project,” which “used 100% State and private funds.”

In the same release, Gov. John Carney said the transit center is one of several state investments in Wilmington “that has helped create jobs, improve travel, and spur economic development.”

His comments echoed those he made three years ago when gathering at the Wilmington train station with other local leaders to tout a quarter-billion-dollar investment in city transportation projects. At the time, the governor spoke in front of an architectural rendering of what was then the design for a more expansive Wilmington Transit Center.

While Carney had said that such investments are critical for the state’s economy, a Delaware Online/The News Journal review of lease documents raises further questions about whether taxpayers got the best deal possible.

Transit Center LLC now leases the property, located along Front and Walnut Streets, from the state for a $1 a year, then subleases the ground floor of the transit hub back to taxpayers, through DART, for $50,000 a year.

After 25 years, taxpayers will receive 25% of the operating income that flows from Transit Center LLC’s business. Not counted in calculating the income is DART’s rent payment.

The state does not have projections for the amount of those potential future profits, Sisson said.

The state was to receive 50% of the operating income, according to a previous draft of the lease, but the figure was adjusted downward after updated designs called for fewer private operations, Sisson said.

Still, the deal was a good one for the state, Sisson said. When asked over email, he did not say whether DART had considered the costs of an alternative, entirely public, structure.

A decade ago, construction on Dover’s park and ride, which included a new bus loop, parking areas, improved shelters and a stormwater system, cost the state $5.7 million.

Jed Hatfield, president of Colonial Parking, the lead company behind Transit Center LLC, did not respond to a request to comment for the story.

Safety critiques

Since 2017, public-private partnerships have gained popularity among many who say the deals can remove investment strains from taxpayers’ shoulders while making government operations more efficient.

Yet, others, many on the left, have criticized them as amounting to handouts to favored businesses.

One is Rep. John Kowalko, D-Newark, who said the Wilmington transit center’s deal appears “very questionable.” It adds to previous concerns he has held about Delaware’s use of public-private partnerships, he said.

Skepticism of the transit facility also has come, perhaps surprisingly, from bus advocates, many of whom staged protests two years ago after the dismantling of Wilmington’s previous bus hub at Rodney Square in the central business district.

Amid those protests, Scott Spencer of the Coalition to Return Bus Service to Rodney Square had said the new transit center is not a suitable replacement. Its capacity would be less than the former hub at Rodney Square, he said, even smaller than the transit center in Dover.

More recently, Spencer and John Flaherty, an open government advocate, have called on DART to provide a safer path for pedestrians walking between the new Wilmington bus facility and the old train station. Riders crossing Walnut Street between the stations must negotiate a dangerous road with poor visibility at the crosswalk, Flaherty said.

With such comments in mind, DART decided to allow certain buses to continue to stop at the train station for riders to get off.

Flaherty argues it isn’t enough. He says riders transferring to buses from trains still will be forced to cross the busy Walnut Street, often in a rush.

“There’s no line of sight, there,” he said. “You got cars going across the bridge over the Christina (River) there, driving like a bat out of hell.”

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