In what may be one of the biggest boondoggles of recent memory (and that’s in a city with a track record of corruption and cronyism dating back to the Colonial era) the Daily News reports today that Philly’s tax payers have been covering Water Works Restaurant and Lounge’s utilities bills. For nearly six years! How did this happen? Politically well-connected owner Michael Karloutsos, who unsurprisingly had zero restaurant experience prior to entering into a partnership with the city to open Water Works, says it’s because he was never billed. The city, which first denied the allegations, says the situation is complicated.
Since the restaurant is housed inside city-owned property, and shares utilities with the rest of the building, special equipment was needed to measure how much Water Works should be billed. So rather than install that additional equipment, and charging the restaurant for what it owed, the city simply picked up the tab — as much as $225,000 for electricity alone! After meters were installed, the restaurant reportedly paid for its own gas, electric and water from 2010 to 2011. But for 2011, it was back on tax payers. Without any real explanation.
This isn’t the first time that the restaurant, which reportedly took almost 25 years to complete — again on taxpayers dime — has been embroiled in scandal. You’ll recall last summer a former employee sued, because he was owed a 10 percent stake in the venture. In those proceedings, it was revealed that Water Works was being embezzled untold sums, operating at a loss, and the owner’s brother-in-law had pleaded guilty to skimming thousands of dollars from it in a billing scam. On top of all of that it also failed to make good on its deal to pay three percent of its gross annual receipts to the city’s general fund.
With our city’s long history of corruption and incompetence it’s one thing to simultaneously get burned on a shady restaurant deal and cover the utilities of said politically-connected business, but the real insult to injury here is, we’re not talking a highly regarded Stephen Starr or Jose Garces effort. This is Water Works, which despite its million-dollar views of the Schuylkill River and Boathouse Row, is one of the most critically panned restaurants in Philly.