PHILADELPHIA When the city cut a deal in 2012 for a holding company, Kenpor L.P., to take and rehab about 100 properties in Kensington and Port Richmond that had been in foreclosure after Robert Coyle, convicted of fraud, defaulted on $10 million in mortgages in 2009, Sandy Saltzman was skeptical.
"We really were worried about the fact that these properties were in such poor condition that they were not going to be able to be taken care of in the way they needed to be," said Saltzman, executive director of the New Kensington Community Development Corp.
Now, it seems, those fears have been realized.
Many of the 86 properties Kenpor still owns remain in dire condition. And the company - which said it ran out of money during a 13-month delay in recording the deeds - has announced it will auction off the properties May 1.
"Fifty percent of the properties will be sold without reserve and regardless of price," Kenpor's lawyer, Walter Weir Jr., said, naming Madison Hawk as the auctioneer.
Buyers will be restricted to 10 or fewer parcels apiece and required to put $6,500 per property in escrow for improvements. There is no plan to prescreen the buyers, and critics worry the escrow funds will be insufficient to repair the deteriorating properties.
"An auction . . . only is going to work if it's somebody who can show they have the wherewithal to make the needed repairs," Salzman said. Otherwise, "it's going to be the same thing all over again."
The fallout from Coyle's scam has destroyed neighborhoods, she said.
The city's deal with Kenpor was a bid to make the best of a bad situation. The city would forgive $630,000 in municipal debt secured by the properties; in return, Kenpor would put that amount in escrow and use it to rehab the sites.
But by last month, Kenpor had not fully funded the escrow account, secured or assessed all properties, or obtained licenses as required by city law.
Rebecca Swanson, spokeswoman for the Department of Licenses and Inspections, said reinspections in March turned up ongoing problems.
"It appears that Kenpor has failed to honor its responsibilities as a property owner, as many of the violations have not been complied," she said.
Some of the homes are vacant, some are occupied by squatters, and some house longtime tenants.
One tenant, Zulma Rivera, lives in a house on the 600 block of East Wensley Street in Kensington with a roof leak and no heat or electricity.
After she complained at a status hearing last month, Kenpor offered to move her into an "improved house" at 3153 Weymouth St. But that house has no valid rental license and had been cited for 10 violations in 2008. It was not clear last week whether those problems had been resolved.
"The house needs a lot of work, and [Kenpor] wants me to move today," she said. "I can't go there. That's too much to ask."