The fight over land behind PHA suit

On June 19, 2006, Mayor John F. Street called a summit for two powerful players in Philadelphia real estate.

On one side was Kenny Gamble, the millionaire R&B maestro whose local nonprofit - Universal Community Homes - was a developer in the Martin Luther King Plaza public housing project in South Philadelphia.

On the other was Carl R. Greene, the head of the Philadelphia Housing Authority, who was in charge of the redevelopment.

The men were at war over four parcels of land.

Greene refused to give the land to Universal. He said Universal hadn't done any work to earn it. And if Gamble didn't like it, he could get a lawyer to negotiate buying the land.

After Street had left and the meeting had ended, Greene said, Gamble leaned toward him and said, "I don't need lawyers."

"I have friends."

Gamble's contact with one of those friends - Housing and Urban Development Secretary Alphonso Jackson - is now the focus of a federal lawsuit, as well as an investigation by the inspector general for the Department of Housing and Urban Development.

PHA alleges that Jackson tried to pressure the authority to turn over to Universal - at no cost - land worth $7 million. And that when the housing authority refused, HUD retaliated.

Last year, HUD declared PHA in default of its agreement to redevelop the Martin Luther King project. Separately, it stripped the authority of any autonomy in spending $300 million in federal funds.

Greene said that would result in fewer new affordable housing units, as many as 240 layoffs, and fewer services for residents.

The dispute involves four properties: a shuttered community center; a cleared block intended for a park at 12th and Catharine Streets; and two lots where 19 market-rate houses were planned.

Greene said in an interview that Gamble wanted them all - "literally for nothing."

Gamble did not return calls seeking comment for this article.

HUD has denied undertaking any retaliation. The department has said that PHA lost its autonomy to spend "Moving to Work" funding because it did not provide enough housing for people with disabilities.

Street, who is PHA's chairman, wrote in an e-mail to The Inquirer that he was dismayed that his efforts to mediate the situation were unsuccessful.

"Now there are investigations, litigation, and so much aggravation over a situation I hoped and believed could have been resolved a long time ago," Street wrote.

The revival of the Hawthorne neighborhood in South Philadelphia has been a matter of intense interest for Gamble and Greene.

The community - bound by Washington Avenue and 11th, Broad and South Streets - went from bust to boom after the 1999 demolition of four derelict towers that were part of the Martin Luther King housing project.

For Gamble, 64, the redevelopment of the site was part of his vision for revitalizing his old neighborhood.

Gamble, who earned his fortune writing hits such as "Love Train" and "Me and Mrs. Jones" with partner Leon Huff, grew up on the other side of Broad Street, near 15th and Christian Streets.

Dismayed by the neighborhood's slide, he moved back in 1989 and four years later started a nonprofit to build affordable housing, educate children, and provide social services and job-skills training in the neighborhood.

When PHA got federal funding to rebuild the Martin Luther King site, Gamble's Universal Community Homes was an obvious partner.

PHA selected Universal and Pennrose Properties, a for-profit affordable-housing developer, as the main developers.

For Greene, 51, PHA's executive director since 1998, the Martin Luther King project was another chance to put his signature on public housing in Philadelphia.

The $67 million Martin Luther King redevelopment - 136 apartments and 109 houses for sale - was launched by PHA in 2000.

PHA said delays by the developers threw the project off schedule and in 2004, PHA fired the Universal-Pennrose partnership.

Universal was kept on to help with the pre-construction process, community relations, and screening of applicants. It also was to develop the community center and park.

Universal agreed to waive any fees for its services in return for the right to develop 19 market-rate homes on PHA property valued at about $2 million.

But by 2006, PHA's relationship with Universal had soured.

Greene said Universal did not do the work it was contracted to do. He refused to turn over to Universal the land for the 19 homes, or control of the community center and park.

Furthermore, Greene told HUD he wanted to nix the community center and park. He said the land could be better used for housing.

That change of heart was no small matter for Universal.

The housing market in the area of the project had taken off, with prices tripling over 10 years. New houses there today can easily sell for $500,000.

Universal could expect to sell 19 market-rate houses for about $10 million.

Now it was left with nothing.

On Sept. 13, 2006, Gamble brought a visitor to Universal's headquarters: Housing Secretary Jackson.

He had invited him to Philadelphia to see firsthand what was happening at the Martin Luther King site.

Jackson, 62, has been dogged by allegations that he arranged HUD work in New Orleans and the Virgin Islands for friends. The FBI and HUD's inspector general have been investigating.

One of the neighbors invited to join Gamble and Jackson was Patricia Bullard, president of the Hawthorne Empowerment Coalition, a local community group.

Bullard showed the secretary the empty ground at 12th and Catharine Streets where neighbors hoped to see a green plaza. She pointed out the squat, round community center, where the Rev. Dr. Martin Luther King Jr. addressed supporters in 1965.

She said Jackson mostly listened. "He didn't have anything to say," Bullard said.

When Greene learned of the housing secretary's visit several days later, he was livid.

"I'm used to people pushing back and calling in favors, or calling politicians," Greene said. "That happens every day. But it's very unusual for the secretary to come personally to Philadelphia, to personally visit the site, and to draw a conclusion without ever having a dialogue with us."

Jackson followed up with a call to Street. According to PHA's lawsuit, Jackson directed Street to convey to Universal the two parcels of land for the houses.

Greene said no.

Shortly after, PHA was put on notice by HUD that it was at risk of defaulting on its agreement to redevelop the Martin Luther King projects. HUD froze PHA's $125,000 line of credit.

The reason given: PHA's failure to renovate the community center, develop the park and build the 19 market-rate houses.

A former HUD official who had direct involvement in the dispute insisted that there was no connection between Gamble and PHA's default notice.

"I never told Carl, 'Thou shalt sell property to Universal,' " said Orlando Cabrera, who recently left HUD as an assistant secretary.

"The only thing Carl was ever told is, 'We don't care how you develop those properties, just develop them,' " he said. "You can do it on your own, we don't care. Just build it."

On March 13, 2007, Universal hand-delivered a settlement offer to Street.

It offered to buy the land for the 19 market-rate houses from PHA for $506,000 - about a fourth of the appraised value.

The community center and park were not mentioned in the letter to Street. But according to Greene, Universal still wanted to take them over at no cost.

Two days later, Greene said, he got three calls from HUD officials, asking about the project at the request of Jackson.

Instead of negotiating, Greene dictated a formal complaint to HUD's inspector general.

The letter said Jackson directed HUD staff to contact Greene "in an attempt to convince PHA to give away public property worth almost $7 million to or for the benefit of a politically connected private developer."

PHA noted that Gamble spoke at the 2000 Republican National Convention in Philadelphia.

Cabrera, the former HUD assistant secretary, denied interference. "Carl would love for this to be an issue of personality. It's not. This is an issue of Carl not doing what he said he would do."

As it stands, PHA plans to develop a park and build 19 houses - to be sold at "affordable" prices, not whatever the market will bear. It plans to demolish the community center, PHA says.

Universal filed a formal appeal with PHA in July, but that was denied by a PHA arbitrator.

Universal was informed by PHA on Oct. 17, 2007, that any further consideration of the dispute would have to wait until after the HUD inspector general's investigation.

"We were willing to negotiate on all these issues," said Andre Desant, the attorney for Universal. He said the nonprofit's interest in the park and the community was simply to help develop something that would benefit the neighborhood.

Abdur-Rahim Islam, Universal's president, wrote in an e-mail that Universal had made "substantial contributions to the success" of the Martin Luther King project.

"Universal's main concern is to see this most worthy development is completed as planned," Islam said.