Sold for $1, resold for riches: How Philly gave away $54 million in properties

In 2001, Elsie Wise went to City Hall to ask if her West Philadelphia nonprofit organization could have two pieces of vacant land that sat next to Drexel University’s athletic fields.

Before she could get to the details, the chairman of the city committee had a question for her: “With Mrs. Blackwell’s endorsement?” That meant, did she have district Councilwoman Jannie Blackwell’s approval.

“Yes,” Wise responded. And with that, Wise quickly explained her plan for a garden where senior citizens could sit and knit.

The committee asked no questions before approving the sale to the West Powelton Concerned Community Council for $1.

With property values surging in the neighborhoods around University City, the nonprofit sold those two lots four years ago — and another $1 parcel last year that it had turned into a neighborhood playground. Price tag: $670,000.

West Powelton’s reward was far from unusual. The city’s $1 land sales — meant to revitalize blighted neighborhoods, create affordable housing and bring properties back onto the tax rolls — have by default enriched many people and organizations over the years, with little oversight or accountability.

Of the 2,314 properties that the city has sold for $1 since 2000, according to an Inquirer analysis of property transfer data, about 800 have been since resold for $54 million.

Some of those flips, like those in West Powelton, had been gardens, side yards, and playgrounds before being sold for market-rate development. Other properties became housing for people with modest incomes as intended.

Nearly 1,200 of the $1 properties have remained vacant. Some are still eyesores. Others have been maintained over the years, but were awarded to owners without the money or capacity to develop them — a missed opportunity for affordable housing and the city’s coffers.

Through a clause in most of the $1 deeds, the city has the right to take back parcels that have not been developed or rehabilitated within one year, and give them to someone who has more means to follow through. But it has seldom done so.

The Inquirer found that just 24 of the $1 properties have been reclaimed by the city and in one case it ended up benefiting a member of one of Philadelphia’s political dynasties.

“The city could pull back tens of millions of dollars in real estate tomorrow by just saying, ‘Hey, you’ve had this for a decade. You have six months to show us your plan of action for these or we are taking it back,’ ” said Ori Feibush, a developer who closely tracks the city’s land deals. “And they could still fix it. Not as effective as fixing it 10 years ago, but there’s still a lot of money on the table here.”

In response to The Inquirer’s findings, a spokesperson for Philadelphia’s various landholding agencies said that since 2000, the city has supported the development of 10,000 affordable homes. The spokesperson said many of those were built on once publicly owned land, but could not say how many affordable homes came out of $1 land deals.

“Not every sale has led to the outcome the city expected,” Jamila Davis said.

Last month’s criminal indictment against Councilman Kenyatta Johnson suggested that the way Philadelphia decides whether to reclaim property can be fraught with politics.

» READ MORE: Feds charge Philly City Councilmember Kenyatta Johnson with using his office to enrich himself and his wife

The city’s redevelopment authority gave three large pieces of land for $3 in 2005 to a partnership between Universal Companies and the Philadelphia Housing Authority, called Uni-Penn. After one of the lots at 13th and Bainbridge Streets had sat vacant for nine years, the redevelopment authority tried in 2014 to take it back.

Then, according to the federal indictment, Johnson stepped in.

“Johnson advised the PRA that he would not support revision, which had a ‘chilling effect’ and halted the reversion process,” the indictment read.

Federal prosecutors are arguing that since Johnson’s wife, Dawn Chavous, had an alleged no-show consulting job with Universal, his actions benefiting the company amounted to a bribe. Both Johnson and his wife have denied the allegations. Johnson’s lawyer said he had not seen any evidence from prosecutors backing that allegation.

All land transactions require approval by City Council, which usually defers to the local representative, a time-honored practice known as councilmanic prerogative.

Giving away properties for $1 made sense in the 1990s and even in the early 2000s, in an effort to revitalize the hollowed-out city. As Philadelphia’s population declined from its high of 2.1 million residents in 1950, tens of thousands of abandoned and tax-delinquent homes were left to crumble. The city amassed 40,000 vacant properties.

“There was nothing to indicate that 10 years later property would be extremely valuable," said John Kromer, the city’s director of housing between 1992 and 2001. "… All the trends were negative — poverty, population decline.”

In the new millennium, the city was desperate to fix its rundown image, recalled Ira Goldstein, president of policy solutions at the Reinvestment Fund, which helps finance neighborhood revitalization. Mayor John F. Street spent millions of dollars demolishing thousands of vacant, dilapidated properties. "You would move heaven and earth to get blight removed and repurposed,” he said.

Which is easier said than done.

One of the beneficiaries of the city’s program was Building Block Development and a subsidiary, Brooklyn Heights LP, which picked up 34 lots in West Philadelphia between 2006 and 2007 for $5, promising to build affordable housing. The group was approved for financing by the Pennsylvania Housing Finance Agency.

By 2008, the developers had stopped paying taxes on the lots. No development followed.

In 2013, the redevelopment authority’s director, Brian Abernathy, threatened to take back the parcels. Following his letter, Abernathy said, “Councilperson Blackwell intervened and attempted to facilitate a resolution.”

But development stalled and trash piled on the properties. As recently as five years ago, the staff at St. Ignatius of Loyola church and school were calling City Hall to complain about the developers’ large Dumpster containers on the street.

Last year the city sued the developers to get the land back. None of Building Block’s officers — Luis Cruz, Harold Thomas, and Terrance McNair — could be reached for comment. The city declined to answer questions, citing the litigation.

Cruz, meanwhile, was cutting checks to local politicians’ campaign funds. Between 2007 and 2017, he paid $40,000 to various elected officials, including Blackwell and other councilmembers and Mayors Michael Nutter and Jim Kenney. Thomas and McNair also made a few contributions to politicians in 2006 and 2007.

The group now owes $159,673 in back taxes.

Nonprofits big and small also have held on to various $1 lots for years, despite pledges to develop the land.

The Francisville Neighborhood Development Corporation received five commercially zoned lots near fast-gentrifying 16th and Ridge Avenue in 2013. One lot the group developed into a 14-apartment building, now valued at $3.7 million. The four other lots haven’t yet been developed. Executive director Penelope Giles said that one is on track to become a year-round open-air artisan market, the other is to be a building of residences, retail, and offices.

The New Kensington Community Development Corporation has been holding on to some of the most valuable of the $1 deals. One of the seven lots it acquired between 2001 and 2009 is a park with benches where Fishtown residents take their dogs. The others sit vacant. Together, the seven are worth $1.2 million. The city isn’t benefiting from the rising value; the properties are tax-exempt.

The group received zoning approval in January 2019 to build single-family homes on four of the lots, and said the homes will be affordable.

On paper, the City of Philadelphia has the opportunity to protect the public purse when a $1 deal is sold for profit. Its deed restrictions on how the property was to be used typically must be cleared by the title company before the sale can close.

Take the case of Denis Boyce, a Fishtown art gallery owner who bought a lot down the street for $1 in 2002. It came with a requirement that it be developed into a community garden and be kept that way — or as open space — for 30 years. Two years later, Boyce got a certificate from the city that he’d done all that was required. But then in 2016, he sold the property to a developer for $339,900. He didn’t reply to a request for comment.

The former garden, at Frankford Avenue and Mercer Street, is now three apartments, above ground-floor retail space, that rent for $1,595 a month for a one-bedroom unit.

On the other hand, John Dowell Jr. said he had to pay back the city in 2011 when he and his wife sold their $1 lot at 1518 N. 15th St. near Temple University. They were required to improve the lot within a year of their 2002 purchase. But Google images show that the lot, which was adjacent to their home, was overgrown in 2007 and in 2009.

The owners then sold the building, which Dowell had purchased for $8,000 in 1983, and the vacant lot for $765,000, after the city certified that the deed conditions had been met. But Dowell said that because he never developed the lot, he had to pay the city about $15,000 or $20,000. The city would not confirm a payment.

What was once a side lot for Dowell and his wife is now market-rate student housing.

The city could not provide a list of properties that it had taken back for lack of development.

Councilwoman Maria Quiñones-Sánchez said there have been “dozens of examples” since her election 12 years ago when she has wanted the city to take properties back for lack of progress, but “they never did. ... Because it’s the bureaucracy.”

Of the 24 reclaimed properties The Inquirer found, one stood out.

Damaris Hernandez got a house from the city on North Hancock Street in Norris Square for $1 in 2000. She lived there until an electrical fire two years later. She was planning to fix the house, she said, but a local community leader told her the house was too dangerous and she couldn’t go back in. In May 2002, the city repossessed the lot, saying the 2000 deed had not been fulfilled.

“They took my house away and knocked it down,” she said in Spanish. She went to live with her sister at Sixth and Tioga and later, with the Red Cross’ assistance, was placed in Section 8 housing.

In 2006, the city sold the land for $8,000 to the person who owned the house next door, Renee Tartaglione, scion of a Philadelphia political dynasty.

Those lots now compose the sprawling backyard and parking area for Tartaglione, who is serving an 82-month sentence for looting a nonprofit mental health clinic. Tartaglione had worked in the city elections office, run by her mother, Margaret Tartaglione, until the Board of Ethics documented the daughter had violated the city’s ban on politicking.

» READ MORE: Philly politico Renee Tartaglione guilty on all charges

Carlos Matos, who is Tartaglione’s husband, said Hernandez’s home had been demolished and the property was available when they purchased their home in 2003. “The lots were right next to the house. Why wouldn’t we buy them?" he said. "We paid money for it.”

Hernandez said she hasn’t gone back to where her former house used to stand.

“You never forget something like that and especially with an injustice like that,” she said.

Philadelphia officials are aware they’ve made it too easy for others to profit off the city’s laxity. "That is why Council passed and the mayor signed legislation to make the property disposition process fair, transparent, predictable and trackable,” said Jamila Davis, the city land agencies spokesperson.

She was referring to a new law and policy that went into effect in January. It requires that nominal land sales have a financial plan in place and, unless otherwise authorized by Council, a permanent deed restriction or a 30-year mortgage that ensures the city benefits if the land is sold prior to the terms of the agreement.

The new policy also gives the redevelopment authority the ability to take back property if the recipient fails to comply with the terms of the agreement.

But former city executives, good-government experts, and developers say loopholes remain in the new law — such as the matter of councilmanic prerogative, which still allows local politics to dictate what ultimately happens with city land.

Complicating oversight of the $1 sales, the city doesn’t have a master list of properties given away or the associated deed restrictions.

“Going forward, how do you asset manage lots of discrete parcels where documentation may not be perfect?” asked Noel Eisenstat, former executive director of the Philadelphia Redevelopment Authority. “It’s management intensive, needs a lot of resources, and needs a lot of focus. … Someone should have a master log to be able to manage that.”

As for West Powelton’s Concerned Community Council’s recent windfall, little is known publicly. Elsie Wise is in her 90s, and her son, Aaron, said she was not in condition to answer about the nonprofit’s intentions. He said proceeds from the sale would be reinvested in the community.

Neither transaction turned up in federal tax returns that are required to be filed by the nonprofit and made public. The IRS revoked the group’s tax-exempt status in 2014.

The family that lives across the street from the playground was saddened to hear that it will soon be gone — replaced by an apartment building with a roof deck.

One mild December day, Jacair Nelson, 11, hugged the thick base of the gray tree that he and his twin, Nacair, have loved climbing. Jacair looked up and said, “Bye, tree.”

Staff writer Chris A. Williams contributed to this article.

The Inquirer’s investigative reporting is supported in part by The Lenfest Institute’s Investigative News Fund. Gifts to support the Investigative News Fund can be made at www.sinomn.com/donate. Editorial content is created independently of the Fund’s donors. A listing of Lenfest Institute donors can be found at lenfestinstitute.org.