Following a $165K windfall, Kenney cracks down on public land flipping

Mayor Kenney on Monday issued a directive to crack down on land speculators and unscrupulous developers, following news reports about no-bid sales and profitable land flips aided by the city’s disjointed process for selling its vacant lots.

In a letter to Bridget Collins-Greenwald, commissioner of the Department of Public Property, Kenney wrote that future sales of city-owned lots must include deed restrictions that require developers to follow through with their rehabilitation or construction plans within 18 months.

Developers also must get written permission from the city before reselling public property within five years of purchase. Those who violate the conditions could lose the land.

Kenney’s directive – similar to changes proposed last week by City Council President Darrell L. Clarke and Councilman Kenyatta Johnson – was effective immediately.

The changes follow an Inquirer and Daily News story that outlined how a childhood friend of Johnson’s was able to make $165,000 over the summer by essentially acting as a middleman between the city and a Baltimore-based developer.

The city sold two lots in Point Breeze to Felton Hayman for $65,000 in August on the assumption that he would build houses there. The sale price had been set three years before and was far below the current market rate.

Before approving the sale, the Philadelphia Redevelopment Authority’s board emphasized that Hayman must submit an Economic Opportunity Plan so a portion of the construction work would go to minorities, women, or people with disabilities. No such plan was filed, but the sale went through.

In September, Hayman resold the lots to the Baltimore-based developer for $230,000.

Under Kenney’s new directive, a developer like Hayman would be required to get the approval of Collins-Greenwald and the city’s Vacant Property Review Committee before reselling the land.

Kenney’s letter does not address another issue that arose in the Hayman deal.

Hayman was able to purchase the property without competitive bidding because he was backed by Johnson. Despite other developers' interest in the lots, the city’s landholding agencies viewed Hayman as the only “eligible purchaser" because of Johnson’s support, which was needed to get the sale through City Council. Under an unwritten tradition known as “councilmanic prerogative,” Council members defer to one another when it comes to development in their districts.

For his part, Johnson said he did not set the sales price and was unaware that other developers were interested in the properties.

Hayman is not the only developer to reap a windfall in Johnson’s Second District.

In January, the Inquirer and Daily News reported that a religious nonprofit, Chosen 300 Ministries, with Johnson’s backing, purchased two Point Breeze lots from the city in 2014 for about $7,500 each. The group said it intended to create a community garden and build low-income housing. Chosen 300 then resold the properties, along with a third lot to a for-profit developer for $120,000.

The lots were later sold again, with Johnson’s support, so $500,000 townhouses could be built there. No affordable housing was ever built.