Queen’s Row apartments; million dollar blight

On the face of it, Queen’s Row, an apartment building near the Queen Lane Train Station, looks like just any other abandoned property in Germantown. The details tell a different story.

Located on the 500 block of Queen Lane, the building has been vacant for over five years now. Still, it’s expensive for a vacant building. According to public records, the Kensington based CDC that owns the building has not repaid $2.08 million of publicly funded debt that went to finance low income housing at the site, plus it owes over $22,000 in back taxes and thousands in unpaid water and sewer bills.

Offer on the table

A Germantown developer, Yvonne Haskins, has been trying for years to take the building off the public dole and put it back on the tax rolls, but she can’t get anywhere because of all the red tape.

“I’ve been thinking about that building for a long time,” she said. “We’ve had to call the police about squatters and other forms of mismanagement of the property many times.” Haskins owns other properties close to Queen’s Row.

In 2009 she offered the current owner, Hispanic Association of Contractors and Enterprises, $100,000 for the building as long as the city and state agreed to forgive the current mortgages. Haskins thought she had a deal.

But when Guillermo (Bill) Salas Jr. executive director of HACE discovered that the city Redevelopment Authority would not forgive the loans if HACE took Haskins’ money, he declined the offer.

Community concerns

Some community members in Germantown are worried about how long HACE has been willing to hold onto a property that continues to degrade. They say its actions are eerily similar to another non-profit that mismanaged housing developments in the area for years – Germantown Settlement.

Irv Ackelsberg, local attorney and member of the community group Germantown Community Connections sent a letter to HACE recently following up on repeated requests for a community meeting about Queen’s Row. “If Mr. Salas is prepared to act like a community development corporation rather than just another community-unfriendly land speculator, I would suggest a meeting right away,” he wrote.

Salas thinks likening HACE to the now bankrupt Settlement is unfair. “Bad management happens everyday of the week in corporate America,” he said. “So I think to generalize because of one poorly run non-profit is wrong.”

For 30 years HACE has been developing low-income housing in West Kensington. The majority of the CDC’s properties are rental housing developments catering to mostly Latino families. HACE has received numerous awards for its projects in Kensington, and in January Citizens Bank awarded the CDC a $25,000 “Champion in Action” grant.

When long time Germantown resident and Germantown Community Connection member Pamela Bracey saw that announcement, she was astonished.

“I appreciate what HACE has done in Kensington, but I really don’t think HACE is being a good neighbor in Germantown when they leave us with abandoned and blighted properties” she said.

Never part of the plan

HACE never planned to start developing housing in Germantown. Though the low income housing model at Queen’s Row fits with what HACE does, the Germantown apartment building is the only housing project the CDC has undertaken outside of Kensington. In a way, the project is a casualty of HACE’s biggest success.

HACE purchased Queen’s Row as part of a larger deal with with developers Michael Young of Classic Management and Susan Rabinovich of Canus Corporation in 2002. Young and Rabinovich owned Queen’s Row and the site of the old St Christopher’s Hospital along 5th Street in Kensington, an ideal location for a large affordable housing project that HACE wanted to build.

In the purchase agreement that lead to the current Lehigh Apartments on 5th Street, Young and Rabinovich required HACE to take Queen’s Row off their hands as part of the deal.

According to Pennsylvania Housing Finance Association records, there are currently two outstanding mortgages on Queen’s Row left over from the original 1989 taxpayer funded loan to Queen Lane Investors (Young and Rabinovich’s company) totaling $290,294 and $435,000, respectively.

Young and Rabinovich said they were unaware any money was still owed on these loans. They declined to comment on why they insisted on including Queen’s Row in the sale agreement with HACE.

One year after the sale, HACE began running a $15,000 yearly deficit for Queen’s Row. By 2004, HACE could no longer make regular payments on the PHFA mortgages. Instead of foreclosure, PHFA helped HACE restructure its debt and even increased the Section 8, HUD contract rents to boost its income on the property.

By 2005 HACE took out additional publicly funded loans of $290,000 and $500,000 through the Philadelphia Housing Development Corporation. The RDA now holds that debt.

By 2007 only half the building was occupied. That same year, after a dispute about repairs with the Philadelphia Housing Authority, the management partner at the time, HACE asked to end the federal Section 8 rent subsidy and the building became vacant.

The same year a Licenses and Inspections report lists vermin infestation, window bars on emergency exits, the lack of fire extinguishers, smoke alarms, and a broken hot water heater among the violations that languished for months before the October 2007 closing.

Tax-funded loans then and now

PHFA says the reason it hasn’t pushed HACE to repay $725,294 plus interest, in publicly funded loans that it holds for Queen’s Row Is because the CDC has been operating in the red.

“Our view is that HACE is a struggling non-profit that provides essential programs in inner city Philadelphia,” said Scott Elliott, communications manager for the PHFA. “If we were to demand repayment it could jeopardize some of their programs. So we were thinking of the broader community.”

The RDA has also decided not to foreclose on the $790,000 plus interest of publicly funded loans that it holds on the property.

Instead, in January, it approved HACE for an additional $1.4 million loan to rehabilitate the Lehigh Apartments in Kensington for a second time. The RDA maintains that this loan is not eligible for Queen’s Row.

Shortly after the new loan approval, Bill Salas was confident about securing private funding to finally get the Queen’s Row project back on track.

“We already hired an architect, contractor, and filed a building permit,” he said. “I expect to secure financing within 30 to 60 days and construction will take roughly six months.”

After 30 days, Salas did not respond to requests for updates on the status of this private funding. Yvonne Haskins said her offer is still on the table.