Uncertain future for blighted Philly properties once part of Germantown Settlement empire

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A Philadelphia nonprofit is petitioning to take legal control of a half-dozen blighted properties once part of Germantown Settlement’s vast real estate portfolio — properties the Philadelphia Housing Authority is set to acquire and restore as part of a larger effort to increase the neighborhood’s supply of affordable housing.

Last May, City Council passed a resolution transferring 28 properties from the Philadelphia Land Bank to the housing authority. The authority, the city’s largest landlord, is now working to complete mandatory due diligence so it can take ownership of these properties and construction can start.

In the interim, the properties belong to the Philadelphia Redevelopment Authority.

But as the acquisition process moves forward, a group called the Philadelphia Community Development Coalition is also pursuing these properties under a state law commonly referred to as Act 135. The controversial measure provides a mechanism for neighbors, nonprofits and municipalities to revitalize abandoned and blighted properties in their community.

PCDC is no stranger to Act 135, filing well over 100 petitions since launching around 2015, according to The Philadelphia Inquirer. But longtime residents in Germantown are scratching their heads about this group of petitions given the housing authority’s involvement.

And there’s concern these court proceedings could further delay the properties from being put into productive use amid an ongoing affordable housing crisis.

“We have been waiting way too long for these properties to be renovated,” said longtime resident and civic leader Pamela Bracey. “Let’s get these properties back on the tax rolls.”

An attorney for David Champagne, founder and president of PCDC, did not respond to a request for comment, so it’s unclear if Champagne was aware of the housing authority’s plans for the properties before he filed the petitions. All six petitions were filed before Councilmember Cindy Bass introduced the resolution to transfer the properties.

PCDC is “dedicated to the improvement of Philadelphia’s neighborhoods,” according to its website.

Champagne has likened Act 135 to a “magic wand” and said his motivation for filing petitions under the law boils down to his dislike of “abandoned houses,” according to the Inquirer.

Settlements on the horizon?

If a judge grants his organization’s petitions, PCDC would become the conservator of:

• 60-74 East Collom St.
• 6657-59 Blakemore St.
• 45 East Garfield St.
• 47 East Garfield St.
• 51 East Garfield St.
• 38 Wister St.

Under the law, Champagne’s nonprofit could also be granted the ability to sell these properties and take a substantial fee — up to 20% of the sale price. The measure also enables the conservator to recoup all legal fees and repair costs.

The redevelopment authority could also settle one or more of these cases before they reach that stage. And all of these petitions are poised to go that route, according to court documents.

Under a settlement, the authority could agree to sell these properties to PCDC, consent to the nonprofit becoming the conservator, or agree to make repairs in exchange for the organization dropping its petitions once they are completed.

In each of these scenarios, PCDC could reap some kind of financial benefit.

“I have seen Act 135 used for good and I have also seen some suspect uses of Act 135 that I thought really stretched the intent of Act 135,” said Michael Froehlich, managing attorney of the Homeownership and Consumer Rights Unit at Community Legal Services, which is not involved in any of these cases.

A status hearing for all of these petitions is scheduled for April 15.

Citing the ongoing litigation, a spokesperson for the Philadelphia Redevelopment Authority declined to comment.

The housing authority, which is not a legal party to these cases, declined to comment directly on the petitions. In a statement, a spokesperson said Act 135 “should not apply to public property.”

“It fails to account for the lengthy regulatory process that PHA must follow before it can rehab, sell, or acquire properties and turn them into housing to benefit low-income Philadelphians. The only people who benefit from these lawsuits are the lawyers who file them,” the spokesperson said.

In 2020, the redevelopment authority seized 45 properties tied to a group of companies led by Emanuel Freeman, who led Germantown Settlement for more than two decades before the politically connected nonprofit became defunct in 2010.

The list includes the properties Champagne’s group is now looking to acquire.

The redevelopment authority seized the properties after a legal fight rooted in a federal loan issued to Settlement to develop the properties for low-income housing. The lengthy court battle unfolded after neighbors derailed a deal that would have saved Freeman nearly $6 million in interest and penalties on the loan.

The redevelopment authority rescinded the offer after reviewing photographs and documents compiled by neighbors over weeks to illustrate Freeman’s negligence. They found that tenants were living with unstable heat and water, and that common areas were strewn with trash and debris, among other things.

While Bracey and some of her neighbors have mixed feelings about the housing authority revitalizing the properties, they are eager to see them restored after years of disrepair.

“The Germantown Settlement properties need to be refurbished and need to be made available to individuals who are looking for housing,” Bracey said.