Philly’s $9 million goodbye to Germantown’s worst landlord

This story originally appeared on PlanPhilly.

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Everyone has crossed paths with a bad landlord.

Then there’s Leroy Prince. His apartment in East Germantown doesn’t have hot water.  The gas is on. It’s the tank that’s the problem. It’s broken. And there’s been no word that a new one is on its way.

“I have to do like they do in the old times: boil water and take it in and wash like that,” said Prince recently, while shooting the breeze with his brother outside the Hamill Mill Apartments complex where he has rented for nearly a decade.

The brick buildings appear sturdy, and they aren’t bad-looking, with forest green window trimmings and star-shaped bolts on the masonry. But the handsome exterior disguises a mess of problems that stretch back nearly 20 years — and could soon be resolved. That resolution won’t happen easily or cheaply, though. The cost of fixing up this unassuming section of Germantown: more than $9 million in lost loan payments and likely, millions more in repair and renovation bills.

The company that controls the property – and several others nearby – is facing foreclosure as the result of an unusual set of circumstances involving City Hall and Emanuel Freeman, the neighborhood’s most notorious real estate man.

Prince, a tenant since 2010, should be able to stay. But the situation makes him shake his head.

“If I had the money, I would buy the building and fix it up,” said Prince.

In the 1980s and 1990s, Freeman controlled hundreds of affordable housing units while directing the nonprofit Germantown Settlement.  The historic social services agency, now defunct, wielded tremendous power – and millions of taxpayer dollars – with considerable help from political allies, most notably the area’s previous City Councilwoman, Donna Reed Miller.

“There was a period of time, probably 20 years, where every public dollar going into Germantown, whether we’re talking about housing dollars, social service dollars, foster care dollars, counseling dollars, all these public dollars were going through Settlement,” said longtime resident Irv Ackelsberg.

For years, that yielded positive results, said Ackelsberg. Settlement was a responsible organization with viable programs his low-income neighborhood needed.

But around 2000, things started unraveling – at Settlement and a related housing company responsible for managing its vast portfolio of properties.

“It just became a domino effect, where you would take money from a successful program to prop up a failing program, but then the formerly successful program was short of money and now that’s starting to fail and the whole thing fell apart,” said Ackelsberg.

By 2010, Settlement was filing for bankruptcy because Freeman mismanaged all those taxpayer dollars while the nonprofit carried millions in debt. Ackelsberg, a party in the case, said it was a “disaster” for the community.

“It lost its one social service provider, it lost its housing development corporation, it lost all of these assets,” he said.

Yet even as Settlement dissolved, Freeman, to the chagrin of neighbors, retained control of many of the properties once part of the Settlement empire.

The list includes the brick apartment building where Prince lives without a working water heater, but also a host of abandoned properties, including a townhome-style development on East Collom Street, near Germantown Avenue, the neighborhood’s main commercial corridor.

On a recent Thursday morning, longtime resident Ted Stones scanned the complex’s parking lot.

It’s filled with trash and debris – a lot of wood planks, tires and mattresses. Has been for years.

“Children walk through here, neighbors walk through here, it’s depressing. It kills the community spirit. It kills self-esteem for a lot of people,” said Stones.

The sight is particularly upsetting, said Stones, because his community needs affordable housing now more than ever.

“We have people living in abandoned houses in the community. We have people knocking on my door asking for somewhere to stay or money to get something to eat,” said Stones.

Lately, though, residents have reason to be optimistic that developers could, at some point, restore the development and other crumbling leftovers of the Settlement days.

The Philadelphia Redevelopment Authority is now in a position to seize a few dozen properties tied to a group of companies led by Freeman.

To do that, PRA has to walk away from $3.55 million in federal loans awarded to Settlement to develop low-income housing and more than $5 million worth of interest and penalties, money the agency won’t have to fund similar projects.

The process, rare for the authority, is already underway.

Germantown activist Yvonne Haskins couldn’t be happier Freeman may soon be out of the picture.

“I just want to be relieved of him. We want him out. Whatever he does with his life, God bless him,” said Haskins.

It almost didn’t happen.

At a board meeting in February, Freeman was offered (for a third time) a deal PRA has proposed to other developers over the years: agree to fix up the properties and pay back the principal on the loan and we’ll forgive all interest and penalties.

The deal would have saved Freeman nearly $6 million and preserved his ties to properties he has neglected for years. In 2016, Hamill Mill tenants were left without heat for months because of a nearly $60,000 debt Freeman owed to Philadelphia Gas Works.

Freeman and his lawyer declined requests for comment. The number listed for his management company is disconnected.

The properties could have easily stayed in Freeman’s hands if Haskins and another neighbor hadn’t caught wind of the PRA board meeting and gone down to raise a stink about the deal the authority was offering.

“This is such a victory,” said Haskins. “We have been so worried that because Freeman was making the grandiose promise of both paying the Redevelopment Authority and borrowing money to restore these properties that they were drinking the Kool-Aid.”

PRA Executive Director Greg Heller said the deal came off the table because the properties needed “significantly” more money for renovations than Freeman was offering – $2.5 million for nearly 50 properties.

“It was definitely a sacrifice, but we made the decision because we felt that defaulting the loans and attempting to take control of these properties was the right thing to do for the well-being of the neighborhood, for the preservation of these affordable housing units, and for the tenants who are still in these units,” said Heller.

It’s unclear, however, what will happen to these properties if PRA forecloses on them.

The agency has reached out to the Philadelphia Housing Authority to see if they could manage the occupied units, potentially long-term.  PHA spokeswoman Nichole Tillman said on Thursday that the cash-strapped agency “will determine how [it] can get involved once the PRA has acquired the properties.”

She noted that PRA and PHA have worked together in the past to resolve similar situations.

Other Freeman holdings may be offered to developers via bids.

“The bottom line is that there are a lot of details to work out,” said Heller.

Before anything can happen, the redevelopment authority would need to take an inventory of the properties, which will include figuring out exactly how many tenants are living in these buildings and their condition.

Ackelsberg, the attorney, said whatever happens, the city needs to make things right.

“We need the city to really look at Germantown as the historic, wonderful neighborhood that it is. And we could use some help. And part of that help is getting these properties into responsible hands and away from this character, this effectively gangster,” said Ackelsberg.