While online sheriff’s sales of Philadelphia properties have been suspended until September, questions from City Council suggest the pandemic-era auctions may be imperiled.
Questions like, Is the contract with the Maryland-based Bid4Assets.com even legal?
“The Bid4Assets contract clearly violates the city charter,” City Councilmember Helen Gym said Tuesday.
After a six-hour hearing on the sales two weeks ago, the at-large councilmember contacted the Law Department to see if Sheriff’s Office officials had consulted it before signing the contract, a requirement, she said, of Philadelphia’s Home Rule Charter. She was told the Law Department had not been contacted.
Andrew Richman, chief of staff for the Law Department, confirmed via email that his office “was not involved in the approval or preparation of the contract.”
The skirting of city attorneys calls into question the legality of the sales of more than 200 properties during online auctions the Sheriff’s Office has conducted this spring.
Sheriff’s officials defend the contract, saying the COVID-19 pandemic was a public-health emergency, which allowed extraordinary measures to conduct business safely.
The contract warranted Council’s scrutiny, Gym said, because of the Sheriff’s Office’s tumultuous history. The previous sheriff, John Green, is still in prison, in part, because of the sheriff sales.
During the April hearing, Gym raised concerns that many organizations, including the Land Bank, which was created to streamline selling the city’s abandoned properties, had not been consulted before the sales went virtual.
“Struggling communities in particular, we want to ensure that proper processes have been put in place, not just because of a matter of bureaucracy but because they ensure that there’s inclusion, that there’s dialogue and consideration of the broader needs of the city,” Gym said.
Councilmembers also have questioned the length of the contract.
The city charter says that if a contract is more than one year, it has to be authorized by Council.
The Sheriff’s Office’s contract with Bid4Assets is six years long — a stipulation that Tariq El-Shabazz, legal council for the Sheriff’s Office, said allowed flexibility, such as the right to cancel the agreement after 90 days.
Although the courts have postponed sales until September, in order to gauge the effect of $350 million in federal money headed to Pennsylvania to aid homeowners who have fallen behind in their mortgage payments and property taxes, the Law Department is reviewing the contract’s legality.
Teresa Lundy, spokesperson for the Sheriff’s Office, pointed to a March 2020 emergency order from Mayor Jim Kenney that allows City of Philadelphia departments, agencies, boards, and commissions to enter contracts and authorized the city solicitor to suspend formalities that “may cause undue delay.”
She said it was also the reason the contract also did not go through a formal bid process.
Gym countered: “It’s hard to imagine that anybody thought that it was appropriate to move forward at such a rapid rate on a no-bid contract without appropriate oversight.”
Although the contract costs the Sheriff’s Office nothing, over time, Bid4Assets collects a buyer’s premium placed on properties. On a tax foreclosure, the company collects a premium of 10% of the property’s sale price and on a mortgage foreclosure a 1.5% premium.
Curtis Douglas, the sheriff’s top legal adviser, retired last week. He was responsible for helping construct the contract. Douglas said the retirement had been planned since last August when he was hired.
He said that this past February he was thinking of running for office, but after conversation with the sheriff he decided to stay, help launch the virtual sales, and step down in April.
He is the fourth top staffer to leave the office in the last year. Three of them are suing Sheriff Rochelle Bilal after being fired in 2020.
With the legality of the contract under question, the next question is: What happens to the sales conducted in April.
Before the postponement of the sales, five sales were conducted in April, and 223 homes and properties were sold.
Richman of the Law Department would not say. “At this time, we cannot comment on these ongoing discussions or how these next steps will affect the April sales,” he said.