The development arm of Germantown Settlement, a venerable but financially troubled Philadelphia social-service agency, on Tuesday was given four months to sell or refinance its largest piece of commercial real estate or face possible foreclosure on the property.
At stake is the Burgess Center, a complex at West Chelten and Wayne Avenues in Germantown that includes retail businesses and government offices. The center has been one of Settlement's signature properties, but it is now at risk because of delinquency on a $7 million mortgage to Parke Bank.
The property is owned by Greater Germantown Housing Development Corp. (GGHDC), which is a subsidiary of Settlement. Like Settlement, it filed for bankruptcy protection in April.
According to its bankruptcy filing, GGHDC is more than $11 million in debt. That figure includes the $7 million owed Parke, plus $2 million owed the Philadelphia Industrial Development Corp., $240,000 owed the Internal Revenue Service, and $110,000 owed the City of Philadelphia. GGHDC also faces a $454,297 lien on a debt owed Alan Hostetler Insurance Agents & Brokers.
GGHDC contends that the Burgess Center is worth $14 million. An independent evaluation has not been done on the property.
Parke Bank, of Washington Township, Gloucester County, asked the U.S. Bankruptcy Court in Philadelphia to dismiss GGHDC's case. Dismissal would have permitted the bank to foreclose on the Burgess Center.
The bank contended that GGHDC had no money to operate the center and was in danger of losing tenants at the property because of plumbing and air-conditioning problems.
At a hearing before Chief Bankruptcy Judge Stephen Raslavich, GGHDC attorney Thomas D. Bielli said Parke had agreed to withdraw its motion and provide $200,000 in short-term financing. The money will enable the Burgess Center to repair the air-conditioning and plumbing and provide for debt service on the property.
In exchange for Parke's agreement, GGHDC agreed to seek a buyer or new financing for the property within four months.
John E. Kaskey, who represents Parke Bank, said the bank was hoping the loan and four-month grace period would enable GGHDC to "get back on its feet."
Financed largely by city, state, and federal dollars for decades, Settlement has debts that include about $2 million in unpaid taxes and millions more in government loans. By its own estimation in August, it was $38 million in debt.