Family Court deal canceled

After nearly two years and more than $10 million, state Supreme Court Chief Justice Ronald D. Castille has killed the no-bid development deal on a new Family Court building.

Castille decided to dismiss developer Donald Pulver after The Inquirer disclosed that Pulver had made lawyer Jeffrey B. Rotwitt a partner in the project - at the same time that Rotwitt was being paid as Castille's representative.

Castille said Rotwitt never told him about what he calls a possible conflict of interest. Rotwitt insists Castille knew about it all along and has said there was no conflict because he had finished his work for Castille before forming a partnership with Pulver.

He also said he was not acting as a lawyer in the deal, but a broker.

The terse termination letter, sent Wednesday, says that the courts are exercising their option to cancel Pulver's deal in three days. It's signed by Philadelphia court administrator David C. Lawrence, who works for Castille.

Meanwhile, now that the deal has been terminated, lawyers working for Castille are trying to figure out where all the money went.

Some of the fees paid to Pulver have proven difficult for court officials to explain. For example, the courts have paid Pulver $1 million for "land" costs, even though Pulver was paying nothing for development rights at the site proposed for the new court building, at 15th and Arch Streets.

Pulver has said that the land payments cover his costs for old deals that went sour. The site is owned by the Philadelphia Parking Authority, which granted air rights for development to Pulver in 2003 in return for his pledge to build an underground parking garage there. The authority also sent Pulver a notice Wednesday canceling the deal.

The courts have also paid Pulver $298,000 for real estate taxes; city records show Pulver was billed a total of just $186,000 since 2008.

Castille's cancellation of the project came as no surprise. Gov. Rendell announced last week that the state Division of General Services, not Pulver, would supervise construction of the $200 million project, the largest state-funded project in the city after the Convention Center. Rendell said the project would be opened to public bidding.

Pulver spokesman Mark Nevins said the developer still hoped that he could work out a deal with the courts and stay on the project. Pulver is officially still in control of the air rights for 30 more days.

"It's important at this point that no one overreact," Nevins said.

Vincent J. Fenerty Jr., the parking authority's executive director, said Pulver should face reality. "Did he read the court's letter?" he asked. "I'm speechless. He was fired by the court."

Fenerty said Pulver and Rotwitt lost their opportunity to develop the facility by failing to disclose their partnership.

"They're going to have to take their lumps for not being able to deliver and not being forthright with us," he said.

While the deal may be dead, questions remain about oversight of the development.

Castille personally spearheaded the project, meeting with politicians, property owners and architects and signing off on the fees that Pulver and Rotwitt proposed.

Castille said in an interview last week that he was relying on Rotwitt's advice that the fees were reasonable. He said he gambled on a process without a signed development agreement to speed construction of the urgently needed facility.

"I took a roll of the dice," he said in an earlier interview.

Rotwitt, an attorney with the politically potent firm of Obermayer, Rebmann, Maxwell & Hippel, was first hired in 2006 by former Supreme Court Justice Sandra Schulz Newman to find a site for a new Family Court.

The courts, which handle divorces and custody battles as well as juvenile criminal and dependency cases, are now split between a handsome but outdated building at 1801 Vine Street, and a cramped and dingy office building at 34 S. 11th Street. Judges and advocates have struggled for years to find a way to build a new courthouse.

Rotwitt originally agreed to work without pay, and to take his fee as a commission once the deal was done. Castille changed those terms in October 2008, signing a letter that authorized monthly payments to Rotwitt, Pulver and other consultants.

The money came from a surcharge that has been collected on Philadelphia court filings since 2006.

Rotwitt has received $55,000 a month even though he had no role in selecting the 15th and Arch site; that was arranged directly by Castille and Fenerty.

About $5.3 million has gone for architectural designs and drawings, which might end up being used for the project.

But $4.8 million has been paid already to Pulver, Rotwitt, lawyers and other consultants.

Pulver already has received more than $1 million as a "developer's fee." He and Rotwitt now say they've been splitting that money 50-50.

Castille said he never knew about they were partners until it was reported last month by Inquirer architecture critic Inga Saffron.

Rotwitt, meanwhile, also has received $1.1 million from the courts so far as a "tenant representative," a role in which he scouted a number of potential sites in Center City - but not the one eventually chosen at 15th and Arch.

He was supposed to receive the rest of his total fee, $3.9 million, by June 30.

"It's not a surprise," said public relations consultant Kevin Feeley, a spokesman for Rotwitt. He said the letter agreement between the courts and Pulver makes it clear that either side can cancel the deal on three days' notice.

Feeley also noted that the most recent letter agreement spells out that developer's fees have gone to Rotwitt's firm, Deilwydd Property Group FC L.L.C., without mentioning Rotwitt's connection to Deilwydd by name.

"There has been no secret of this relationship for the better part of two years," Feeley said. He declined comment on the fees, but said: "I suspect this is not the final word on these particular issues."

Castille's spokesman, L. Stuart Ditzen, said that the payments are "presently being reexamined." He said Castille would have no further comment.

Other lawyers working for Castille have demanded an accounting from Pulver and Rotwitt. Court representatives say Castille is waiting for those answers before deciding whether to try to get the money back.

Glenn Blumenfeld, a lawyer and tenant representative for major companies, said he can't understand why the Castille started paying millions without nailing down any of the agreements that would be routine if a person were building a middle-class home – let alone a $200 million courthouse.

Blumenfeld said nothing about Pulver's deal makes sense - starting with why he gave Rotwitt half his deal. Pulver has said he needed help in getting his project through a political "labyrinth" in Philadelphia.

Donna Cooper, Gov. Rendell's director for policy and planning, said with funding coming from the state capital budget, the no-bid deal with Pulver would have been problematic even without Rotwitt's involvement on both sides of the deal.

Cooper said it was a "tragedy" if it turns out that the courts wasted millions in unnecessary fees.

"What is unusual in this situation is that one branch of government is so misinformed, or ill-informed, or not aware of the process used to construct public buildings," Cooper said.