After a series of embarrassing stories of developers reaping inappropriate windfalls, city officials have halted the sale of public lots recommended by a committee created to vet such deals in the first place.
The Philadelphia Redevelopment Authority is setting aside virtually all sales that come through the Vacant Property Review Committee — whose chair is selected by the City Council president — in what officials say is an effort to prevent developers from continuing to exploit loopholes in the system at taxpayers’ expense.
The freeze follows recent Inquirer and Daily News reports about how a childhood friend of Councilman Kenyatta Johnson’s was able to make $165,000 in September by reselling two Point Breeze lots he’d purchased from the city the month before at below market value. The sales had been approved by the VPRC.
The newspapers have previously reported that other developers backed by Johnson, including campaign contributors, had gone through the VPRC and leapfrogged competing developers to purchase land at steep discounts in no-bid sales. WHYY reported last week on a similar land flip.
“Anytime we see information like that and stories like that it makes us go back and look at our policies,” said Jim Engler, Mayor Jim Kenney’s chief of staff. “We want to develop a system that is accessible for people, but also be responsible with our city-owned assets and make sure they’re not exploited.”
The VPRC makes recommendations to the Redevelopment Authority on the sale of land owned by the city’s Department of Public Property. The Redevelopment Authority acts as the settlement agent and its board then votes on approval of the sales.
Recently, however, the VPRC’s oversight and record-keeping have been called into question.
In the case of Johnson’s developer friend, Felton Hayman, the VPRC failed to disclose that other developers had submitted expressions of interest for the sought-after properties, which should have triggered open bidding. The VPRC also initially inaccurately described Hayman’s intended use for three of the properties as “side yards,” not to be developed. Hayman built homes there that sold for as much as $415,000.
The FBI in November subpoenaed city records pertaining to the most recent Hayman transactions, in which he purchased two lots for $65,000 and quickly resold them for $230,000.
Anne Fadullon, the city’s director of planning and development, said Friday that she and Greg Heller, executive director of the Philadelphia Redevelopment Authority, were in agreement with the decision by the authority’s board decision to postpone the VPRC-related sales.
“The [Redevelopment Authority] board said, ‘Let’s just take a pause,’ so they really can understand what’s going on,” said Fadullon, who also chairs the board.
Fadullon said board members had been “feeling a little bit uncomfortable” approving the VPRC land sales, given the committee’s recent track record of recommendations. The board also wanted time to review an executive order issued last month by Kenney aimed at stopping future land flips and speculation in city properties.
The Redevelopment Authority’s decision not to finalize the sales of VPRC-approved properties is likely to increase tensions between the Kenney administration, which typically favors competitive bidding, and Council members, who want to maintain their influence over who purchases land in their districts.
Councilwoman Maria Quiñones-Sánchez opposes the redevelopment authority’s move, saying it will contribute to existing delays in selling vacant and blighted land. The city’s Land Bank, created in 2014, was supposed to professionalize and streamline the process, but it has been slow to get off the ground.
“You can’t ask me to trust the process when nothing is going to move,” Quiñones-Sánchez, said.
All sales of public land in Philadelphia must be approved by Council. Under the unwritten tradition known as “councilmanic prerogative,” Council members defer to one another when it comes to development in their districts.
She said the Redevelopment Authority’s emphasis on selling properties to the highest bidder would primarily benefit wealthy out-of-town developers, while locking out neighborhood residents — some of whom have been maintaining land in hopes of purchasing it.
“People have been waiting in line for years and now they have to compete with investors in bidding? That’s gentrification,” said Quiñones-Sánchez. “Competitive bidding will push all my people out.”
Clarke spokesperson Jane Roh declined to comment Friday.
Fadullon said the city’s landholding agencies would not always use competitive bidding and would remain flexible with pricing in cases where the “highest dollar value may not actually be the best value for the city” — such as land targeted for affordable housing, workforce development, business expansions, and side yards.
“We want to make sure we have neighborhoods that work for everybody,” Fadullon said.
The path forward remains unclear, but both Council and the Kenney administration agree that the land disposition process needs to be streamlined and that there must be more accurate record-keeping and clearer communication among city agencies and potential buyers.
“Unless we can be sure that Council members and the public are getting the most accurate information, the system will continue to fail,” Councilman Johnson said in a statement. “This is a citywide problem that needs a citywide solution, so I’m pleased that Mayor Kenny’s administration is working to make improvements.”
But Quiñones-Sánchez, who sponsored the Land Bank legislation, said she was still struggling to find out which property sales in her district are being delayed and for how long.