Mayor Kenney and City Council can't avoid responsibility for Councilman Kenyatta Johnson steering city-owned land to a friendly speculator, who pocketed a $165,000 profit by flipping properties months after purchasing them from the city — in transactions that broke city rules designed to protect taxpayers' interests in publicly owned properties.
The Philadelphia Redevelopment Authority, whose board is appointed by the mayor, ignored its own rules, and Council approved the deal. Both acted without concern for the public good.
For decades, the 10 district Council members have controlled city-land transfers and zoning variances, under a practice known as "Councilmanic prerogative." Their leverage comes from the tradition of letting district Council members introduce a legally required ordinance to transfer public property in their districts. But any member of Council can sponsor the bills. The practice persists because the seven at-large members and administrations go along with it.
In this transaction, Johnson's long-time friend, Felton Hayman, had Johnson shepherd three properties through Philly's city bureaucracy, one that's so tangled that it's easy to hide sleazy deals like this.
In August, Hayman bought three properties in the booming Point Breeze for the bargain price of $101,000. So far, he has sold two at a $165,000 profit. He retains ownership of a third.
The three properties were owned by the taxpayers and any sale should have passed the test of whether the property would benefit the public – such as putting some money in the city's coffers.
But that didn't matter in August and it didn't matter in 2016, when Johnson helped Hayman buy city-owned land. In that transaction, Hayman promised to build affordable housing. But his houses sold for as much as $415,000. That's not affordable.
This time, he and Johnson didn't even pretend they were being altruistic.
Staff writers Mark Fazlollah and William Bender reported that the city never should have let Hayman buy the properties. The city's rules require competitive bidding when there is an expression of interest from other potential buyers. But PRA staff dismissed its failure to recognize other potential buyers as a clerical error, an excuse that wouldn't get a second grader out of homework. The city also based its price on outdated assessments even though the city is supposed to sell properties at fair market value. And, the city let Hayman skip out on signing an Economic Opportunity Plan, which guarantees that he would award some of the construction work to minorities, women, or people with disabilities. This deal wasn't about helping economically disadvantaged people. It was about Johnson helping his buddy improve his own economic well-being.
The lack of oversight is abysmal.
The mayor and Council should end the archaic and unfair practice of Councilmanic prerogative. Inspector General Amy Kurland should also get on the case and release her full findings to the public. The FBI has already asked for documents on this deal.
But this practice also requires a major policy change. Council President Darrell Clarke should make it his prerogative to speak up about how he's going to change the system.