City paid for Boathouse Row Cafe's utilities

SOME PEOPLE have all the luck.

In May, It's Our Money reported that taxpayers covered hundreds of thousands of dollars in utility bills for Water Works Restaurant & Lounge, a private business owned by the politically connected Michael Karloutsos.

Now, It's Our Money has found that taxpayers also paid for utilities used by Boathouse Row Café, another business owned by Karloutsos. He leased space in city-owned Lloyd Hall, which he shared with the Parks and Recreation Department. From 2006 to 2010, the city paid for the cafe's electricity, gas and water.

Visitors at Lloyd Hall, which is a few hundred feet away from the Water Works Restaurant, can play basketball and take in a gorgeous view of the Schuylkill. Boathouse Row Café served sandwiches and coffee there.

Mark Focht, Parks and Recreation's first deputy commissioner, says he won't be able to estimate how much utilities cost at the café until he receives more data from utility providers.

Focht says "as far our staff knows," the city isn't paying for other for-profit businesses' utilities, with the exception of an "occasional electric hook-up for the food trucks in LOVE Park" — the cost of which, he says, is impossible to measure.

Officials had initially insisted that the city didn't pay for Water Works' utilities.

The concession agreement between the city and a nonprofit that oversaw the Boathouse Row Café at Lloyd Hall stated that the café was responsible for utilities, as did the nonprofit's subcontract with cafe operator Karloutsos.

Focht says he realized the city was footing the bill only after the Boathouse Row Café shut down and Cosmic Catering, another private business, took over the cafe in 2011 and tried to set up utility accounts. He says it was difficult for the utility providers to sort out which electricity and gas meters were connected to the café, and which were connected to the rest of Lloyd Hall. There also aren't separate water meters.

Similar metering difficulties affected Water Works Restaurant, which shares its property with the Water Department. Mayoral spokesman Mark McDonald estimated that taxpayers have paid $225,000 for just the restaurant's electricity.

Karloutsos, a former school district consultant whose restaurant has been the site of fundraisers for Mayor Nutter and Sen. Bob Casey, says he didn't pay for utilities at either eatery because he never received a bill.

"We would have no problem paying our fair share," he says.

Karloutsos strongly denies that his connections have anything to do with the city paying for utilities at either Boathouse Row Café or Water Works Restaurant.

Focht says "it's absolutely not a conspiracy."

After probing by It's Our Money about Water Works Restaurant, the Nutter administration launched an investigation. But the city hasn't announced findings yet.

The city has also paid for utilities at Cosmic Catering since its opening in 2011, despite the concession agreement stating that the business is responsible for the costs.

Focht says the city and Cosmic Catering owner Peg Botto are sorting out the utility problems at Lloyd Hall. The business will start getting billed for gas and electric in July; the city is still working out a plan to charge for water.

"We have been working on this for a number of months, even before you began your investigative piece," Focht said.

Botto estimates that utilities will cost roughly $500 a month. That would mean taxpayers have paid more than $6,000 for her company's utilities.

Focht says the city will be able to recoup the money from Cosmic Catering for the past year.

Botto says she doesn't know if the city can calculate her old bills, but will pay up if the city asks her.

It's unclear if the city will recoup the money from Karloutsos.

Focht says the city won't be able to estimate Boathouse Row Café's bills until Cosmic Catering starts paying all utilities. Even then, it will be difficult because the eateries kept different schedules.

As for whether Water Works Restaurant will pay the city back for the hundreds of thousands of dollars of utilities it used, Focht says the city and the restaurant are "in negotiations."

"As part of those conversations, they're aware that we will bring to their attention the issues with the café," he adds.

Karloutsos says he would pay for Boathouse Row Café's utilities if the city gave him a fair bill. But he thinks it's "pretty unlikely" that will happen. n

Holly Otterbein writes for It's Our Money, a joint project of the Daily News and WHYY funded by the William Penn Foundation, that works to shed light on where your tax dollars are going.