500 properties Philly sold for $1 are blighted or owe nearly $900,000 in back taxes

The deal that the city offered a baker named Mark Dwayne Gresham in 2015 couldn’t have been sweeter: For $1 he could buy the house he was living in at 19th and Federal in Point Breeze, as long as he kept it up and stayed five years.

For Philadelphia, offers like this have been common over the last two decades, allowing the city to give away thousands of abandoned properties acquired as the population declined. And in theory, new owners would earn their bargains by fixing up dilapidated houses and sprucing up vacant lots, returning once-derelict parcels to the tax rolls.

But Gresham immediately fell behind on his property taxes. He now owes Philadelphia $11,557.

Gresham is far from the only owner who bought a $1 property and struggled to pay taxes.

The back taxes and penalties for the nearly 400 other people who’ve kept their $1 city properties over the last 20 years total $867,255.

Last month The Inquirer wrote about the lack of oversight by the city as it sold a total of 2,300 properties for $1 over two decades. Nearly 800 of those parcels have since been flipped — for a total of $54 million. Playgrounds and lots meant for affordable housing have been turned into market-rate homes in neighborhoods that are fast gentrifying.

Of those who haven’t sold their properties, some have simply walked away. Others have left their lots vacant, without the promised development. About one in seven of those properties has racked up five or more violations from the Department of Licenses and Inspections.

» READ MORE: Sold for $1, resold for riches: How Philly gave away $54 million in properties

Gresham moved into the Federal Street house in 1999 and lived there rent-free starting in 2003, when the city foreclosed on the property and let him stay if he’d bring it up to code.

He said he spent between $60,000 and $70,000 in improvements before 2015, when he paid the city $1 for the house, which was assessed for $123,700. As is customary in Philadelphia, the sale required the approval of the district councilman, in this case Kenyatta Johnson.

Johnson referred questions about Gresham to his spokesperson, Vincent Thompson, who said: "He has been in the house since 1999. The councilman doesn’t want to kick people out of their house if he doesn’t have to. So, he supported the gentleman getting this property but he had to make payment arrangements to keep the property. He is paying the back taxes.”

Gresham said he has had medical troubles, which made it hard to stay current with his taxes. He has also had legal troubles.

Philadelphia police raided the house in 2016 and reported finding $136,240 worth of marijuana. Gresham said that a friend had used his house to bake pot brownies. Gresham pleaded guilty to two drug-related felonies and got two years of probation.

A city spokesperson said the $1 deeds do not restrict illegal activity.

One former neighbor, Susan Engle, said she had complained several times to the city about noise coming from Gresham’s house — blasting music, whimpering dogs, and people coming and going at all hours.

Gresham, 50, said he’s paid for his mistakes and has matured. “I get out here every Saturday morning. I clean my block up. I have community days for the children. I feed the police officers every summer. I have a cookout for the firemen and police officers of the 17th district …"

He is on a payment plan with the city, as are about half of the other delinquent $1 property owners. By next year, Gresham said, he will have paid off his tax debt.

“I earned this house."

Through a “reversion clause” in most of the $1 deeds, the city has the right to take back parcels that have not been fixed up or developed, and give them to someone who has more means to follow through. It has seldom done so. The Inquirer found only 24 such cases over 20 years.

The city has another tool: tax-delinquency sales. But former heads of the Redevelopment Authority say that taking properties to sheriff’s sale can be difficult.

Terry Gillen, who headed the agency between 2008 and 2010, said city attorneys argued against taking the owners of smaller properties or with lower tax bills to sheriff’s sale. As a result, “we were more focused on reversion clauses as the low-hanging fruit.”

Even that proved thorny.

As soon as Gillen started the process to take back some properties, the property owner would call the district councilmember or the mayor and complain, she recalled. Word would get back to her to cool off. “It ended up not being worth it.”

Brian Abernathy, the authority’s executive director from 2013 to 2015, said last month that former Councilwoman Jannie Blackwell intervened when he tried taking back 34 lots that the city had given to Brooklyn Heights LLC that were never developed. That developer has racked up 179 blight-related violations and owes $159,673 in back taxes.

“If Council and the mayor don’t agree this should happen, then the head of the Redevelopment Authority won’t be able to do anything,” Gillen said.

Of the nearly 1,500 lots that have not yet been resold, 917 remain vacant.

Nine are on the 1600 block of North Bouvier Street, near Temple University. They are owned by Cecil B. Moore Homeownership Development Corp., a nonprofit run by the Philadelphia Housing and Development Corp. Tax-exempt, the lots have amassed dozens of L&I violations. PHDC officials had no answers for the properties’ decrepit state other than saying that the Redevelopment Authority is exploring options for the lots.

In 2004, four parcels in the 1200 block of North Lawrence and Leithgow Streets went to Beautiful Morningstar Foundation, a nonprofit created by the Rev. Monsignor George Tomichek of St. Peter the Apostle Church. The group had purchased some surrounding properties at the edge of Northern Liberties, and promised to build a community center.

Neighbors recall how Tomichek was close with John “Johnny Doc” Dougherty, who chaired the Redevelopment Authority at the time. When Dougherty, then head of the electricians’ union, announced a run for state Senate in 2008, Tomichek stood by his side, and spoke highly of his candidacy.

Tomichek became ensnared in a scheme in which religious leaders were scammed by Rafaello Follieri, then the boyfriend of actress Anne Hathaway. Tomichek had flown to Rome with Follieri and later the monsignor said he was owed $20,000.

Board members of Beautiful Morningstar gave Tomichek time to resolve the controversy. He died in 2014.

Four years later one of the nonprofit’s board members asked a City Council committee for permission to give two of the lots to a parishioner for a home. The committee was wary and asked for financial details from the would-be purchaser. The matter was tabled.

All four lots remain vacant. The board member, Miguel Leon, did not respond to multiple messages.

One former board member, Wilfredo Rojas, said he was surprised to hear of the plan to give the lots away.

“Those lots were supposed to be for a community center," he said. “If you sell them. it’s going to go to a developer. That’s not right.”

Two of the four $1 lots have a combined tax delinquency of $4,291.

Freshman Councilmember Jamie Gauthier, who replaced Blackwell to represent West Philadelphia, said that she complained to the city Land Bank after reading last month’s article on $1 land deals, asking why it doesn’t effectively track sales of properties once owned by the city.

The current database the Land Bank uses is “not what we need,” she said.

She said she was particularly shocked at the 34 lots in her district that were given to Brooklyn Heights for nominal value in 2007 for low-income housing and that have since sat vacant, accumulating dozens of violations and $159,673 in tax debt. She called them a “nuisance.”

“Those are properties that should have been pulled back,” she said.

As of January, the city has new terms for its $1 deals. Applicants have to show they have the money to deliver whatever they promise they’ll do with a vacant lot, which now come with either permanent deed restrictions or mortgages structured so the city gets some money back if the property changes hands within 30 years.

And the city no longer sells houses for $1.

“While the program was well-intentioned — providing housing while inhabiting vacant properties — people who obtained homes for a dollar often faced financial challenges in keeping the homes,” said Paul Chrystie, spokesperson for the city’s landholding agencies. “For that reason the program was discontinued.”

The Inquirer’s investigative reporting is supported in part by the Lenfest Institute’s Investigative News Fund. Gifts to support the fund can be made at www.inquirer.com/donate. Editorial content is created independently of the fund’s donors. A listing of Lenfest Institute donors can be found at lenfestinstitute.org.