Philly Controller’s Office has referred its probe of Germantown Special Services District to the feds

The Philadelphia Controller’s Office has referred its audit of a defunct Germantown neighborhood group that was controlled by appointees of City Councilmember Cindy Bass to federal law enforcement authorities for further investigation.

The Germantown Special Services District is a quasigovernmental authority that was supposed to collect a special property tax from local businesses and clean up the neighborhood’s commercial corridors. It has not operated for three years after more than 100 commercial property owners voted in June 2019 against reauthorizing the tax, saying the group wasn’t doing its job to clean the Germantown Avenue and Chelten Avenue corridors.

Controller Rebecca Rhynhart’s office launched its audit of the district in 2019 after receiving tips that it was misspending money and finding that it had not filed required financial reports with the state since 2004. The Chestnut Hill Local first reported that the office had referred its findings to the feds.

Rhynhart’s office has declined to release its audit while federal investigators go about their work.

“The findings of that audit and that audit in its entirety were referred to federal law enforcement,” said Jolene Nieves Byzon, Rhynhart’s spokesperson.

Representatives of the Philadelphia FBI office and the U.S. Attorney’s Office declined to comment, citing policies prohibiting them from confirming or denying investigations.

Bass, whose 8th District includes Germantown and much of Northwest Philadelphia, said Wednesday that she welcomed a review of the district’s spending.

“If the Controller’s Office found something that doesn’t look right, I certainly want it investigated,” Bass said. “I don’t want any misuse of taxpayer dollars.”

The district was founded in 1994 but had gone dormant by 2013, when Bass revived it. She chose to structure it as a special services district, with a board appointed by her that included members of her staff, and not a business improvement district, which would include commercial property owners on the board. The district’s budget in 2018, the year before it failed to win reauthorization, was $230,000.

Street cleaning in the corridors is now being handled by the Germantown United Community Development Corp., which has received funding from the city Commerce Department to do the job.

Bass blamed discontent over the special services district’s work on local business owners including developer Ken Weinstein, who owns commercial properties in the district’s boundaries and who Bass said “wanted to essentially, in my opinion, take over the GSSD.”

Weinstein said Wednesday that he isn’t surprised federal authorities are investigating the matter.

“We always assumed there was money missing because many commercial property owners were paying into GSSD every year, as required, but we were not seeing clean streets,” Weinstein said. “We knew the money was going somewhere other than where it should have been used. So I’m glad the FBI is looking into it.”