Committee authorizes city to buy waterfront land for prison development, sell vacant lot on Kensington Ave.

Note: This article previously stated that the company that owns 7777-R State Road, the proposed site of a future prison facility to replace the House of Corrections in Northeast Philadelphia, purchased the property last year for $100. This statement is not technically inaccurate, but it does create a false impression that the city is planning to spend more than $7 million on a property that a private owner secured on the open market for a nominal fee.

That’s not the case. The property is assessed for more than $7.3 million. Records from 2007 show that the property was sold for $8 million. Mark McDonald, Mayor Nutter’s press secretary, said that the bank BNP Paribas loaned more than $30 million to a previous owner of the property, Churchill Residential Development, which later defaulted on the loan. After a foreclosure, the bank got a settlement and control of the property with a minimum $100 bid at a sheriff sale where no other parties bid, according to McDonald. McDonald said that on the last transaction, the owners paid a transfer tax based on the $7.3 million value.

We’re still trying to sort out the ownership history of the property. But property records frequently reflect transactions that aren’t conducted at “arm’s length,” meaning ownership may be transferred from one partner in a company to another, or the records may not reflect in-kind payments. We shouldn’t have published the last sale price without that context, and we regret the error.

City Council’s Committee on Public Property voted on Monday to approve a bill that authorizes the city to purchase a 58-acre parcel of land on the Delaware River for the purposes of building a new prison facility to replace the 140-year-old House of Correction, in Northeast Philadelphia.

The bill was introduced late last month, as the Philadelphia Business Journal reported previously. It authorizes the city to spend up to $7,265,299 to purchase the property at 7777 State Road, currently owned by 7777 Philadelphia Loan Associates, LLC. It is assessed at around $7.3 million.

The land is adjacent to the current House of Correction. Michael Resnick, the city’s director of public safety, told PlanPhilly last week that the facility is outdated and “not conducive to mass management” of the roughly 1,500 inmates who are housed there. Purchasing the adjacent tract would allow the city to consolidate operations in the area, update the prison facility, and improve parking issues, Resnick said.

The existing prison will eventually be demolished, said Public Property Commissioner Bridget Collins-Greenwald, in testimony at Monday’s hearing. The development of the new facility will cost anywhere between $300 million and $500 million, Collins-Greenwald said.

The bill would give the city a year to negotiate the terms of the purchase with the current owners; it must sign an agreement of sale by June of 2016.

Councilman Bobby Henon, who chairs the public property committee and represents the area on Council, said that he had recently toured the facility and found the conditions “deplorable.”

Prisons Commissioner Louis Giorla said that the city’s inmate population has fluctuated over the past few years, topping out at 10,000 and then bottoming out at around 7,400. It now stands around 8,000, and Giorla said that even if it drops to 6,000 the planned update to the House of Correction is needed. The vacant State Road property also represents an opportunity to expand the facility without moving to a new location that might generate opposition from neighbors, Giorla said.

Also on Monday, the public property committee voted to approve a bill that authorizes the sale of a city-owned vacant lot at 2459-77 Kensington Avenue. An affiliate of the Boos Development Group is proposing to purchase the lot from the city for $148,000 and develop a Family Dollar there. Hercules Grigos, an attorney representing the developers, said that the property won’t be a dollar store in the sense that everything costs a dollar; in fact, he said, the property is being sold on the condition that it cannot be turned into a dollar store. The Family Dollar that’s proposed for the site is more akin to a CVS or Walgreen’s but without a pharmacy, Grigos said.

Amy Miller, of the East Kensington Neighbors Association, said her group had not yet had a meeting about the proposal, but wondered whether a Family Dollar would put small stores on Kensington Avenue out of business. She also pointed out that the sale price is about $50,000 lower than the city’s assessed value of the lot.

Grigos said the developers offered the asking price. The property was marketed by the Philadelphia Industrial Development Corporation.

Councilman Mark Squilla, who represents the area, asked Grigos to meet with community groups to work through concerns before the bill goes up for a full Council vote.