City selling vacant lots with eye to ‘social impact’

This article originally appeared on PlanPhilly.

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City agencies own roughly a quarter of the 40,000 vacant parcels of land in Philadelphia. It’s a figure that’s barely budged over the last decade despite a building boom and the introduction of several new blight-fighting tools.

But on Friday the Philadelphia Redevelopment Authority plans to put 26 of those properties on the market and take a first (small) step towards a resolution for the backlog of undeveloped, municipally owned land that pocks the city’s neighborhoods.

“What we are hoping to do today is say that we are open for business,” said Gregory Heller, executive director of the Redevelopment Authority. “The gears are turning and we are going to see a substantial volume of properties move in a way we haven’t seen in recent history.”

But the big things Heller is promising have small beginnings. The properties going out for competitive bid on Friday include 24 vacant lots and two empty buildings within City Councilman Mark Squila’s First Council District, which runs along the city’s eastern edge along the Delaware River between South Philadelphia and Port Richmond.  The parcels are clustered in sections of Kensington and Fishtown and in the Whitman and Lower Moyamensing sections of Squilla’s native South Philly.

Heller told reporters that there are 100 other properties that will soon be ready for bidding, and that other Councilmembers have expressed interest. He would not reveal which ones at this point: “It’s going to be a surprise!”

The 26 parcels expected to go up for bid on Friday will make for the largest Redevelopment Authority land sale since an auction of 100 properties in 2015. But this time, the highest bidder will not necessarily win the land.

Earlier in his tenure, Heller implemented “social impact” scoring that give developers points towards their bid if they provide something of benefit to the surrounding community, such as affordable housing, investment in local schools, or the creation of non-construction jobs for residents.

Heller said even the smaller parcels in these bundles can provide some degree of social impact, be it a single affordable unit in an apartment building or a bit of green space. After the bids are submitted, a panel of experts from city agencies including the City Planning Commission and Development Services will review the proposals and rate them on issues like design, minority participation, and the bid price, among a host of other factors. Successful bids will require the approval of City Council after selection by the PRA and the expert panel.

“We aren’t selling these to the highest bidder, said Heller. “We’re not auctioning them, because we really care about having projects that have good design and that have developers with a good record, financing that is feasible, that incorporates social impact and economic inclusion.”

There are also updated, more robust safeguards in place, Heller said, to prevent land from falling into the hands of tax delinquents or slumlords.

The process requires a bidder to list all the individuals or entities with a controlling interest in the application, then authority staffers run compliance searchers to ensure they aren’t behind on their taxes and don’t have any liens on their other properties. These investigations are conducted during the application review, before it goes to the board, and before they settle with the buyer.

For larger developers, that could prove to be a burden if they have intricate financial dealings. But Davis says part of the benefit of these 26 lots, and many of the others coming behind them, is that they are smaller and could provide opportunities to those who aren’t the biggest players.

When the properties go up for bid on Friday, interested parties will have 60 days to make an offer.

The Redevelopment Authority is only one of several landlords within the city’s vacant real estate empire. It owns 2,369 of the more than 8,000 unused city-owned parcels owned by the city. Another 3,767 are owned by the Department of Public Property and the Philadelphia Housing Authority, which is not under the jurisdiction of City Hall, owns another 1,000 or so.

Another agency, the Philadelphia Land Bank was created in 2013 to unite all municipally owned land under one roof. That hasn’t yet happened and for now, it is just one of many land-owning public authorities in the city. It controls 2,246 parcels, according to officials.

During City Council negotiations over the creation of the Land Bank, the legislative body took steps to increase political control over the new institution. Since then, critics have argued that the land bank became just as Byzantine and difficult to use as the other agencies, leaving the vacant parcels it was created to deal with in the same position as ever.

Jamila Davis, a spokeswoman for the Land Bank and the Redevelopment Authority,  told reporters that the five-year-old agency’s slow start can be blamed on the legalities of founding a new agency. She said the first few years, where everything was getting set up, did not really count. Since the 2017 appointment of its first full-time executive director, Angel Rodriguez, the land bank’s staff has doubled.

For Heller, the issue of vacancy couldn’t wait until all the bureaucratic dust settled.

“At this time we still have multiple landholding entities,” said Heller. “Rather than waiting until everything is consolidated … we are just trying to be efficient here within the reality of our situation we are in today.”

Heller said his office began working on these sales in early 2018, when they hired a new director to lead real estate and development finance efforts.

It’s taken all year because many of the PRA’s parcels don’t have proper legal plots, so they have to be redrawn by surveyors, or there are title issues that need to be cleared up, he said.