Center City: Housing Authority Makes Money on Auction; Critics Complain Neighborhood Buyers Left Out

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The Philadelphia Housing Authority brought in $7 million this week at its first auction of blighted properties, but critics disliked what they described as a process that favored real estate developers over neighborhood buyers.

With the help of Max Spann Real Estate and Auction Co., PHA auctioned nearly 400 vacant, scattered-site properties throughout the city in an effort to reduce blight and generate revenue that it said it will invest in its other properties and some of its resident-assistance programs.

More than 300 people registered for the auction, and Robert Dann, executive vice president and chief operations officer of Max Spann, estimated that more than 700 individuals attended the event. Each of the nearly 400 properties, most of which were sold in bundles of between two and 25 sites, were sold, and Dann said sale prices ranged from $17,000 to $1.2 million.

James Enweeji, a Philadelphia resident, purchased a single property at 27 West Manheim St. for $54,000. Enweeji said he looked at several of the properties listed for sale before attending the auction and that the West Manheim Street property was his first choice. Enweeji said he hopes to begin renovating the property as soon as possible and to turn it into a center for  an organization that celebrates and preserves Nigerian culture.

“I think what PHA did was very beneficial,” Enweeji said. “[It is] fighting blight in the city and giving people an opportunity to make the city look beautiful.”

Despite Enweeji’s optimism, some Philadelphia residents were upset by the auction.

In October PHA announced its plan to auction 400 of its approximately 4,000 vacant properties throughout the city. Because these are federally owned properties, PHA had to seek the U.S. Department of Housing and Urban Development’s approval. That process began approximately three years ago. After gaining HUD’s permission, PHA started planning the auction six or seven months ago, Executive Director Michael Kelly said.

A primary goal of the auction was to reduce blight by returning a large number of the housing authority’s properties to the hands of private owners who agree to improve the property within five years.

“I think it’s really looking in context to start to re-knit some of the distress in our neighborhoods, and the housing authority’s properties [have] been a source of a lot of this distress by hanging on to these vacant and abandoned properties that we don’t have the resources to do anything with,” Kelly said.

Some of the properties auctioned have been vacant since they came under PHA’s ownership in the ‘60s and ‘70s, said Michael Johns, general manager of Community Development and Design at PHA.

In addition to reducing blight, PHA officials said they hoped the auction would generate revenue, which the housing authority could invest in some of its remaining 14,000 affordable housing units, approximately 8,000 properties and resident-assistance programs.

“I wish it were an economic development activity, which I think a lot of folks thought it was,” Kelly said. “We’re not giving away property for local folks to have a piece of property… The focus is really, how do we attack blight and how do we bring resources into the housing authority.”

Before the auction some Philadelphia residents expressed concern over how the properties were listed for sale.

To sell such a large number of properties and to ensure that both properties of high and low value were purchased and improved, PHA designed a bundling scheme in which 386 of the 400 properties originally listed for sale were put in packages.

“We are actually bundling high-value properties with low-value properties so an investor has to fix both,” Kelly said. “If we just [sold] the high value, no one would actually invest in the low-area properties, so this now commits investors to do both.”

But Mahdi El, a Philadelphia resident who works with the homeless, disagreed. “The bundling was very discouraging because then that takes the value up, up, up exponentially,” he said.

El attended the auction and said PHA made bidding on any of the properties difficult for many Philadelphia residents because it bundled the properties, held the information sessions and auction mid-week during typical business hours, required potential bidders bring a $2,500 certified check and conducted the sale during the middle of the month. He said that if PHA had held the sale near the first of the month, more individuals would have been able to pool their paychecks, Supplemental Security Income checks and disability benefits.

“Doing it in the middle of the month, in the last week of the month, stuff like that is real tell-tale of [PHA] not really wanting regular folks to have access,” El said.

Though Kelly said he and PHA remain committed to the bundling strategy, the housing authority agreed to have a second auction in response to the concerns that many residents expressed. At the second auction on Dec. 7, each of the 100 properties will be sold individually.

“That would be good if they altered the terms,” El said. “A lot of times what these politicians like to do is … put a Band-Aid on something that’s like a gashing wound. It’s bleeding all around the Band-Aid… They’re making vain attempts to act like they’re helping, but really they’re just getting money.”

PHA further frustrated some residents when, within 48 hours of the scheduled auction this week, it changed the time and location of the event. Those who had preregistered to bid were notified via email. Some residents, however, did not find out that the auction was rescheduled for 2 p.m. at the Westin Philadelphia Hotel in Center City until they showed up around 1 p.m. at the original location in South Philadelphia.

Kelly said the decision was made at the last minute when PHA realized the initial venue was not large enough to hold the number of people interested in attending the event. Kelly said he wished PHA had had more time to give the public notice.

El expressed his disgust. “They pretend they are doing a generous, humanitarian service, but then when you come here you find out it’s really for the 1 percent,” he said. “If they keep the next auction … the same, I think it’s going to be the same people, the 1 percent who have money that are going to attend that and box out the rest [of us].”