City Council demands answers on Philly sheriff’s sudden move to online sales

Rochelle Bilal looks out a window

Philadelphia Sheriff Rochelle Bilal. (Kimberly Paynter/WHYY)

Philadelphia city councilmembers put Sheriff Rochelle Bilal in the hot seat during a lengthy hearing over her office’s abrupt decision to resume auctions of distressed real estate and outsource the work to a private online company.

Councilmembers reiterated past concerns that the resumption of the sale of hundreds of tax delinquent or foreclosed properties would imperil homeowners and that the switch to online sales attracting more out-of-town speculators. But they also raised questions about the nature of the sheriff’s contract with online auction house Bid4Assets, conflicting statements the office has made about the permanency of the shift, and other procedural issues.

In public town halls, Sheriff Bilal initially asserted the switch was permanent, coming nearly a year after her office was forced to suspend in-person auctions it held in a West Philly conference room. But following backlash after PlanPhilly reported on the move to the online platform, she began to assert the new contract was, in fact, a “pilot program.”

Under pressure on Thursday, officials admitted that the sheriff had entered into a six-year contract with Bid4Assets without issuing a public request for proposals.

“Why would it be multi-year and go to 2027 if it was, in fact, a pilot?” asked Councilmember Cherelle Parker, who initiated hearings about the changeover.

Bilal explained that the office could opt to abandon the contract if needed. Undersheriff Curtis Douglas explained the urgent need to resume sales and difficulties raised by pandemic lockdowns led the office to eschew traditional contracting procedures.

“You wanted to do a six-year contract because there was an emergency right now?” asked Councilmember Helen Gym.

“That’s correct,” Douglas responded. “We did an extensive vetting process.”

The Sheriff’s Office pitched the platform switch as a convenient and cost-saving measure. Bid4Assets is not paid directly by the Sheriff, instead, it takes a “buyer’s premium” —  a percentage based on the value of each sale. However, some councilmembers were concerned that the short-term savings to the city agency would be a windfall for the private company based in Maryland. Bid4Assets’ premium, which can be up to 10% of certain sales, would result in lower bids due to this cost.

Under city law, excess proceeds from sheriff sales are supposed to return to individuals who lost their property to the sale. Councilmember Isaiah Thomas argued the new arrangement would mean less money for vulnerable homeowners.

“Those dollars would normally go to the person that owned the home,” he said.

Tariq El-Shabazz, a criminal defense lawyer that ran for District Attorney in 2016 prior to joining Bilal’s team as office counsel earlier this year, indicated that the office had not checked on the rate imposed in other jurisdictions serviced by Bid4Assets. In neighboring Bucks County, for example, Bid4Assets agreed to impose a flat 1.5% buyer’s premium.

Councilmembers also questioned why the online sales had not resulted in more publicly available information after sales concluded, like details about the individuals or companies that won bids. They also raised fears the virtual sales would accelerate gentrification and lead to land speculation or bulk buying of cheap properties.

Witness testimony raised other issues.

Angel Rodriguez, director of the city’s Land Bank, which manages a large catalog of vacant land for redevelopment said he had struggled to coordinate with the new company. The agency is supposed to get the first crack at properties being sold at sheriff sales, but has been forced to use the Bid4Assets website to do so and pay related fees — which could cost the Land Bank about $55,000 a year, Rodriguez said.

“A lot of this could have been resolved if we had been able to have a conversation before the sales,” he said. “We were not contacted by the sheriff…prior to the switch to virtual format.”

Lawyers from Community Legal Services, which represents low-income homeowners, also repeated concern that Bid4Assets’ cadre of 750,000 registered users would draw more out-of-town speculators unfamiliar with local housing protections. The inclusion of a new third party had made it more difficult to postpone or otherwise intervene in sales, she said.

“CLS represents multiple clients whose homes were listed for both mortgage and tax sales in April and May, despite repeated public statements that no owner-occupied homes are listed for sale,” Kate Dugan, an attorney for CLS, said. “This change has added a layer of confusion to an already overwhelming year.”

Councilmembers had to repeatedly raise their voices to maintain order as the hearing stretched on for hours, particularly over El-Shabazz’s forceful rejection of councilmembers’ repeated request that his office asks the courts to once again suspend sheriff sales.

He said doing so without sufficient legal pretext would expose the office to lawsuits.

“I don’t want the public to think they just have to write this letter,” El-Shabazz said. “It’s just not true. It’s much more sophisticated than that.”

Yet later witnesses testified to instances in which prior sheriffs had done exactly that — during economic crises in the 1980s, during the Great Recession, and, once, unilaterally, during the tenure of Sheriff John Green.

“I am disappointed with the tone,” Thomas said to El-Shabazz, at one point. “What you’re hearing today is some of the frustration that has been communicated to councilmembers.”

The Sheriff’s Office later released a statement indicating they would take the hearing under advisement to “refine” the auction process — while making it clear that online sales wouldn’t stop any time soon.

“We appreciate this — and any — opportunity to not only present our case for virtual Sheriff Sales, but to hear from people with differing opinions concerning virtual sheriff sales,” wrote Bilal. “We will be constantly reviewing the metrics of online sales over the next number of months, and are eager to present our findings to the public.”

Allegheny County Sheriff’s Office Sgt. Gina Dascola was also invited to testify on Thursday. She indicated that her office had also faced the need to conduct virtual auctions due to COVID-19 restrictions, but opted to simply host sales on live-streaming services at nominal cost.

She said that since the switch, she has been relentlessly lobbied by Bid4Assets and several competitors pitching a contract similar to the one Philadelphia entered.

“When they did call me I said, ‘No thank you,’” Dascola said. “Now I tell my staff to tell them I’m in a meeting. I’m not talking to them.”

Broke in PhillyWHYY is one of over 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push towards economic justice. Follow us at @BrokeInPhilly.

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