Philadelphia pays utility bills for connected owner's second eatery
June 18, 2012By Holly Otterbein, for It's Our Money
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 Michael Karloutsos.
Now, we've learned that taxpayers also footed the bill for utilities used by the Boathouse Row Café, another Karloutsos business. He leased space in city-owned Lloyd Hall, which he shared with the Parks & Recreation department. From 2006 to 2010, the city paid for the company's electricity, gas and water.
"I just assumed they contacted the utility companies," said Mark Focht, Philadelphia Parks & Recreation's first deputy commissioner. "They obviously were up and running. They had gas, they had water, they had power. I assumed they had arranged to have that and that they were being billed directly."
Focht says he realized the city was footing the bill only after Boathouse Row Café shut down and Cosmic Catering, another private business, moved in and tried to set up utility accounts.
He says it was hard for the utility providers to sort out which electricity and gas meters were connected to the café, and which were connected to Parks & Recreation. Also, there's just one water meter for the whole building.
Karloutsos, a former school district consultant whose restaurant has been the site of fundraisers for Mayor Nutter and Senator Bob Casey, says he didn't pay for utilities at either eatery because he never got a bill.
"I'm not going to pay for something I don't know," said Karloutsos. "If we can come to some type of agreement, we would have no problem."
Officials say similar meter issues made it tough to charge Karloutsos for Water Works' usage. Mayor Nutter's spokesman Mark McDonald estimated that taxpayers have paid $225,000 for just the restaurant's electricity over several years.
Focht says he won't be able to estimate how much utilities cost at the café until he receives more data from utility providers.
Meanwhile, 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.
"In my life, I've never wanted something for nothing," said Karloutsos, "and I'm not going to start with Lloyd Hall or the Water Works or anything else!"
Philadelphia has also paid for utilities at Cosmic Catering since its opening in 2011. Cosmic Catering owner Peg Botto estimates that utilities will cost about $500 each month, meaning taxpayers have paid more than $6,000 for her company's utilities. The business will start getting billed for gas and electric in July, and Focht says the city will recoup the money from the past year.
"We have been working on this for a number of months, even before you began your investigative piece," said Focht. "And in the case of electricity, it's literally like unscrambling spaghetti."
It's unclear if the city will recoup the money from Karloutsos, though.
Focht says it will be hard for the city to estimate Boathouse Row Café's bills because it kept a different schedule than Cosmic Catering.
Karloutsos says he would pay for Boathouse Row Café's utilities if the city gave him a fair bill. But he thinks that's unlikely.