This story originally appeared on PlanPhilly.
A Philadelphia judge played the city’s land sale process to flip a publicly owned lot for a windfall, again calling into question the city’s process for appraising and selling its land.
The city’s Vacant Property Review Committee, which signs off on about half of all public land sales, approved the August 2017 transfer of a vacant lot in Brewerytown to Court of Common Pleas Judge Rayford Means. According to VPRC board minutes, the committee set a sale price of just $7,056 –– a fraction of the price for similar lots in the fast-gentrifying area. The board approved the transfer with the understanding that Means would use the land as a side yard, not sell it for profit.
It became the judge’s third property in a row on narrow North Hollywood Street, next to another lot he also purchased from the city in 2005 as a side yard. The two vacant lots were next to a row home that he and his wife had inherited from her mother in 2003, creating a large unified property with two side yards for residential use.
Means, who had long resided in Overbrook, flipped all three properties to developers just a year after his final “side yard” purchase. City records show that in September 2018 the judge bundled and sold off both vacant lots for $144,666, raking in about 16 times more than what he’d paid the city to acquire the two properties. He sold the home separately, for another $70,833.
Means, who was accused of running an illegal boardinghouse in 2007, told a reporter that he bought the properties “straight up.” But at two different VPRC board meetings, city officials described the lots as side yards. Means, who attended both meetings, did not dispute this characterization.
The city has historically prioritized the sale of these vacant parcels that are adjacent to residences. Land use boards, such as VPRC, are generally more lenient in these instances than direct sales to developers, as residents typically seek these lots for less controversial uses: as private side yards or community gardens.
“As a side yard, there was no expectation that the property would be developed,” Paul Chrystie,a spokesman for the city’s various landholding agencies, said.
Means disputed this, saying he bought the properties “straight up.” But at two different VPRC board meetings, city officials described the lots as side yards. Means, who attended both meetings, did not dispute this characterization.
The judge said the sale to a developer wasn’t about profit. He could not produce exact figures but estimated he had spent more on maintenance, taxes, fines and sweat equity than the lots were worth.
“Was this guy in it trying to make money? No. I was glad to get rid of it,” he said. “I’m suffering. Every time KYW says it’s going to snow, I’m grabbing a shovel. And I’m paying state tax and city tax. I’m caring for this property, but I’m getting older. At some point, I got to unload this stuff.”
The judge said he had paid the city more than what was fair to acquire the land.
“I paid whatever [the city] valued the property at,” Means said of the properties, in a phone interview. “I paid top dollar.”
Yet similar properties on nearby streets in the area routinely sell for anywhere from three to 10 times what Means paid the city. The same company that purchased Means’ property, Creekview Development LLC, closed on another vacant lot one block away for $75,000 in mid-2018.
Another city-affiliated agency charged with land dispensation, the Philadelphia Land Bank, sold a similar property nearby for $26,000 in 2017, just months before Means bought his lot for less than a third of that price.
Chrystie said that Means’ purchase price was determined by an automated land value computer program, known as LAMA, which critics say has systematically undervalued city-owned land. He said that under new policies introduced in November, the city will now seek to independently appraise property prior to sale. The city has frozen all VPRC sales indefinitely, pending further reform.
Akira Drake Rodriguez, a postdoctoral fellow at the University of Pennsylvania’s Department of City and Regional Planning, pointed to the sale as a symptom of a broken system. She said the current way of doing business deprived the city of valuable revenue while benefiting wealthy or politically savvy operators over the interests of neighbors.
“These sales really serve people with a lot of cash on hand, and who are able to flip land quickly. That’s not something the average community member or community organization can usually do,” Rodriguez said. “People are opportunistic. This opens up the possibility for speculation and gentrification.”
The Penn professor recommended streamlining the city’s land sale process –– a confusing bureaucracy currently split between agencies like the Redevelopment Authority and the city’s Land Bank. She also suggested limiting land sales to nonprofit developers and toughening protections against property flippers.
City Hall does make some attempt to limit speculation and other profiteering through deed restrictions imposed on public land sales. But Means –– and other buyers –– have easily found gaping loopholes.
Shortly before the judge unloaded his Brewerytown investments, in July 2018, he requested a release from these deed restrictions, including a nominal requirement that buyers improve property within a year of purchase.
“I would get phone calls. Some developers approached me,” Means said. “I needed to be released from the restrictions so I could sell the properties.”
The VPRC, which is appointed by City Council and the mayor, granted the request, based on the understanding, again, that the lots would be kept as a side yard for a residence.
The board’s current limbo can be traced back to a transaction that, like the sale to Means, ended in a lucrative flip of city land. In that case, the board approved the sale of lots in Point Breeze to Felton Hayman, a real estate investor who had grown up with Councilman Kenyatta Johnson. The VPRC approved selling three city-owned lots to Hayman. He then resold the properties to developers, realizing a $165,000 profit.
Typically, council members weigh in on land sales in their district that are going before the VPRC, submitting letters of support or opposition. Like other real estate transactions that fall under their legislative purview, the sales typically proceed according to councilmanic prerogative with those on the board following the district council member’s lead.
In the case of the Hayman sale, Johnson wrote letters in support of the developer’s purchase, drawing fire that the city’s sale process was politically rigged.
Means said he did not contact the district council office, the office of Council President Darrell Clarke, at any point during the process of buying and then reselling the city land.
Clarke’s office acknowledged that it introduced a routine resolution to approve the sale of land to Means, but did not issue a letter of support. The VPRC is chaired by an appointee of the council president.
Means said he doesn’t remember exactly how he acquired the second city-owned lot he bought before selling his holdings.
“I don’t know how I applied for it,” he said. “But I didn’t talk to Darrell Clarke. I don’t need no councilman. There was no corruption here.”
Means recalled that he decided to acquire his second “side yard” in 2017 because illegal dumping was taking place on the land. The purchase came about 15 years after he and his wife inherited the adjacent house, which Means said they kept as his mother-in-law left it when she passed. It was vacant, he said.
He described this arrangement as part of his wife’s “mourning process.” But when developers approached him about buying the bundled properties just 10 months after he’d acquired his third property on the block, Means decided they’d mourned long enough.
“She understood,” Means said, of his wife. “She got over it.”