Philly’s sheriff hasn’t held a tax sale in years. The city says it’s costing them millions.

The abandoned building at the corner of 36th and Race Streets is in such high demand that would-be buyers are writing their contact information on a demolition notice that city inspectors taped to the front door.

“Love this building. Interested in buying,” one person wrote next to their email address. A local pharmacist left her phone number below that message: “Also interested in buying!!”

Built in 1876 as the original home of Simpson’s Apothecary, the three-story Italianate-style building near Drexel University still features the original pressed-metal facade advertising “Drugs” and “Chemicals.”

“It’s a beautiful, interesting building. I’ve always admired it,” said Robert Howell, another potential buyer of the now-vacant building, in the city’s Powelton section.

Instead, the decaying structure has become a monument to Philly blight.

The side wall collapsed years ago, prompting the city to declare the building unsafe. The backyard is full of trash and rotting construction materials. The unpaid tax bill now exceeds $50,000, plus $4,000 in trash fees.

In April, city lawyers secured a court order to auction the building at a tax sale. The proceeds from such auctions — a key function of the Philadelphia Sheriff’s Office — are used to settle old tax bills. Ideally, the new owners rehab the building and get it back on the tax rolls.

At least, that’s how it is supposed to work.

But the 36th Street property never made it to auction. Nor have hundreds of others across the city that courts have marked for sale. That’s because the sheriff’s office hasn’t held a tax sale for the last 2½ years.

Sheriff Rochelle Bilal and her staff won’t say why.

Since January 2022 alone, about 1,330 tax-delinquent properties have piled up in Common Pleas Court with orders to be sold. But property owners have essentially been free to ignore the threat of auction.

For sought-after parcels, like the historic pharmacy building and vacant lots in gentrifying neighborhoods, the city’s failure to hold the auctions is a lose-lose: The taxes are not collected and nuisance properties are not developed.

Tax sales in Philadelphia initially stopped in March 2020 due to the COVID-19 pandemic. They briefly resumed with online auctions in April 2021, only to be shut down again. Although mortgage foreclosure sales have since resumed, auctions of tax-delinquent properties have not, according to city officials.

A report from the revenue department last week blamed the stoppage for rising property-tax delinquency after years of decline. The city is now owed roughly $170 million in back taxes, an increase of nearly $40 million since 2019.

» READ MORE: ‘Where is the money?’ Ex-homeowners seeking leftover funds from sheriff’s sales are being stonewalled.

“The lack of Sheriff Sales continues to challenge the City’s delinquent tax collection efforts,” the report states. “As a result, delinquency has gradually increased.”

No one in Bilal’s office or Mayor Jim Kenney’s administration in recent weeks would provide a reason for the breakdown in the process, which has left residents and developers across the city perplexed.

Last month, a lawyer for Bilal said in a statement to The Inquirer that tax sales “have not occurred since April of 2021.”

“Subsequently, the City ceased all Philadelphia County tax sales and has yet to resume them,” the statement said, without elaborating.

Ava Schwemler, a spokesperson for the city’s law department, would confirm only that the city is “on a complete pause at the moment for any tax sales.” She referred further questions to Tariq El-Shabazz, Bilal’s undersheriff. Neither El-Shabazz nor Bilal returned requests for comment over the last week.

Christian Crespo, a spokesperson for the city revenue department, would not provide any details about why the sales aren’t happening.

“This is a question for the Sheriff’s Office,” Crespo said in an email on Thursday, adding: “Sheriff Sales are a critical tool in our enforcement toolbox. We look forward to working with the Sheriff’s Office in the coming administration to enforce the law.”

Developer Ken Weinstein, who runs a loan program that trains city residents to be real estate developers and reduce blight, said he and others in the industry have been unable to figure out what’s going on.

“Whether you’re a taxpayer in the city or a developer trying to source properties,” he said, “it’s pretty darn frustrating that these sales haven’t continued.”

On the border of Kensington and Fishtown, the property next to Tami McHenry’s Dauphin Street corner rowhouse has tormented her for years.

In 2019, the demolition next door damaged her home, causing water to leak through the roof and chimney. The vacant lot then morphed into a trash-strewn “jungle,” with weeds reaching above the railing of her second-floor back deck. At one point, a couple moved their belongings onto the lot in the middle of night and appeared to be camping there.

The owner of the lot, a limited liability company whose members declined to comment, owes nearly $20,000 in back taxes, according to city records. But the city hasn’t followed through on the January 2023 court order to put the property up for sale.

“I would love to have something there that’s nice,” said McHenry, 39, an engineering manager. “Instead of just this lot that’s not maintained.”

John Kromer, the city’s former housing director, said the city’s failure to auction off chronically tax-delinquent properties means land speculators could ignore tax bills.

“The threat of sheriff sale, by itself, may get some owners to pay back taxes or enter into a payment plan,” Kromer said. “But once the word gets around that sheriff sales are being suspended indefinitely, the really bad actors are going to feel comfortable forgetting about their tax obligations altogether.”

The current problem appears to be rooted in an ongoing dispute within city government over a controversial contract that Bilal’s office announced in March 2021 had been awarded to Maryland-based online auction company Bid4Assets.

The contract circumvented usual bidding procedures and was signed without the involvement of the law department, raising questions about its legality. That prompted an outcry from City Council members at the time, including then-Councilwoman Cherelle Parker, now mayor-elect.

Competing online auction firms told The Inquirer last week that they were not able to submit their own proposals, and that Bid4Assets appeared to have an inside track on the contract, ultimately landing a deal whose terms they described as unusually favorable to the company.

“It was an odd process from beginning to end,” said Lloyd McClendon, chief executive of Realauction.com, who said the Bid4Assets contract seemed to be awarded “surreptitiously,” despite being one of the largest contracts of its kind in the country.

In online town halls in 2021, Bilal initially said the switch to online auctions was permanent. Then, her office claimed it was a “pilot program.” The office disclosed soon after that the original contract was actually for six years.

“Why would it be multiyear and go to 2027 if it was, in fact, a pilot?” Parker asked at the time.

Within months of the contract being awarded to Bid4Assets, Bilal’s former campaign manager and current spokesperson in the sheriff’s office, Teresa Lundy, began appearing as Bid4Assets’ media contact on its news releases about auctions in other jurisdictions.

Reached by phone last week, Jesse Loomis, the CEO of Bid4Assets, would not provide details on Lundy’s dual role at his company and in the sheriff’s office, or whether she is still employed by the company. He also declined to discuss why tax sales remain on hold in Philadelphia.

“I’m not sure I’m going to be able to comment on that,” Loomis said.

Lundy said in an email Friday: “TML Communications provides communications services to a large client base, which includes corporations, government agencies, and nonprofit organizations. Neither I, nor my firm, played any role in any contract at the Philadelphia Sheriff’s Office.”

McHenry said she has been waiting for the vacant lot next door to appear on the Bid4Assets site since she saw a notice last year that it was scheduled to go to a tax sale.

“I’ve checked it periodically and called them, asking if this is going to sale,” McHenry asked. “We don’t know when anything is happening.”

Instead, the site only lists mortgage foreclosures and a leftover batch of properties whose tax debt was sold in 1997 to what is now US Bank, according to city officials.

Philadelphia has struggled for decades with tax delinquency. A broken property-tax system had enabled out-of-town investors and low-rent landlords to buy up real estate and evade taxes while waiting for property values to rise so they could flip the parcels for a profit.

In the years leading up to the COVID-19 pandemic, however, the city had made significant progress, due to new collection strategies. One of them was more aggressive tax-sale warnings, which jumped from 815 possible foreclosures in 2010 to 10,437 in 2017, focusing on properties with chronically delinquent accounts that are not owner-occupied.

In fiscal year 2019, 7,036 new properties began the sheriff sale process, but only 2,265 sold. Many owners end up paying in full or entering into a payment plan before the auction. Only 5% of properties sold at sheriff sales that year were owner-occupied, according to city estimates.

“This is a legal process, and to the extent that the city operates it and can keep it moving, that’s a huge part of the equation,” said Thomas Ginsberg, lead researcher on Philadelphia taxes at Pew Charitable Trusts. “One of the tools always had been sheriff sales,” he said.

While city officials describe the sales as a “last resort,” they can bring in tens of millions of dollars a year, particularly when the real estate market is strong. In 2017, the sheriff’s office reported turning over to the city about $64 million in delinquent taxes and fees from the sale of 7,026 properties.

But since the suspension of tax sales, property-tax delinquency has been on the rise again, increasing 2% to 8% every year since 2019, or around $5 million to $10 million a year. Today, 60% is owed by investors or landlords, according to the city’s 2023 tax delinquency report.

Jonathan Sgro, an attorney in the homeownership and consumer rights unit at Community Legal Services, said he, like most everyone else, had not been told why tax sales have not resumed.

But the city is continuing to file the foreclosures notices, he noted. CLS provides legal representation to help people keep their homes in cases that involve owner-occupied buildings.

“A lot of these cases are being taken up to the point where they get the order [to sell], then they are just not proceeding with the sale,” Sgro said. Most of his clients are willing to enter into a payment plan when they receive a foreclosure notice, he said. “Our experience has been that when folks are given an affordable way to pay that they do so.”

The city says it wants to prepare to resume sales in 2024. With Kenney leaving office next week, it now falls to Parker’s administration to work out any disagreements with Bilal. A Parker aide declined to comment on the issue.

Weinstein, the developer, said he’s been telling anyone who will listen that the city should get the sales moving again.

“They should be prioritizing any property that is unoccupied and where they owe three or more years of taxes,” he said. “There is no reason to wait 10 or 20 years if it’s not occupied. It’s crazy.”

Howell, who would like to buy the abandoned building near Drexel, said he doesn’t understand why the city has let it deteriorate, right across the street from a bustling new coffee house.

“It’s just sitting there piling up the owed taxes?” he asked. “Hopefully they can get it into the hands of somebody. Maybe someone who could preserve it and breathe some life into it.”

Staff writer Chris A. Williams contributed to this article.