A law meant to bust blight puts Black and Asian American property owners at risk, report warns

When a house fire tore through the Cox family home in Powelton Village last Christmas Eve, displacing 97-year-old Elizabeth Cox and her 71-year-old son, Warren, it seemed like the worst that could happen.

Then three months later, while repairs at the house were still in early stages, the family got a notice in the mail: A nonprofit group had filed a petition in court to seize control of their home as a conservator, claiming that it was blighted and abandoned.

“They were devastated,” said Pilla Parker, Cox’s granddaughter, who found herself in charge of fighting the petition. “They just lost everything. … My grandmother on the coldest day of the year was carried outside with nothing but the clothes on her back.”

Parker learned that the petition for property conservatorship was made possible by a Pennsylvania law known as Act 135, which enables nonprofit organizations to take over abandoned properties, bring them up to code, and sell them, taking a substantial fee.

Nonprofits have filed more than 570 such petitions just in Philadelphia. A new analysis by the Advocacy for Racial and Civil Justice Clinic at the University of Pennsylvania’s law school concludes that the conservatorships have come at the expense of vulnerable property owners. The researchers found that petitions were disproportionately filed against Black and Asian American property owners, and in areas at high risk of displacement due to rising real estate values.

“It shows that despite the intention of the act to ensure development that will benefit people who already live in an area, instead what is happening is that petitions are filed in communities that are already at risk for gentrification,” said Cara McClellan, the legal clinic’s director.

» READ MORE: Penn Law researchers mapped where Act 135 was used in Philly. Here's what they found.

The law was passed in 2008, but usage took off in Philadelphia after it was revised in 2014.

John Taylor, the former state representative who sponsored the legislation, said he was motivated by the abandoned properties dotting his former Northeast Philadelphia district, including a vacant building next to his office that attracted squatters and crime.

“It’s one of the most effective and underutilized laws in all of Pennsylvania,” he said.

In Taylor’s view, the true beneficiaries of Act 135 are the neighbors who worry about a collapsing rowhouse dragging down their homes — not to mention their property values.

But his legislation also greatly expanded the financial upside for conservators.

When a property is sold through conservatorship, the homeowner theoretically recovers any profits. But a conservator who successfully sells a property is now able to recover all of its legal fees and repair costs, plus a fee worth up to 20% of the sale price. In practice, McClellan said, that means owners who can’t afford to fix their properties can be left with nothing.

Even homeowners who fight and get to keep their properties can be on the hook for the conservator’s legal fees.

One of the most prolific Act 135 filers was the nonprofit that filed against the Cox family: Scioli Turco, an organization run under the umbrella of the Philadelphia nonprofit Caring People Alliance, which also runs Boys and Girls Clubs.

Scioli Turco’s managing director Beth Grossman said it does not target gentrifying areas and is not motivated by profit.

“We are mission-based,” she said. “Our mission is to be here as a resource for community groups to address abandoned and vacant and blighted properties.”

She said that saves the city money, helps neighbors, and could even fight crime, given that researchers have found fixing abandoned homes makes communities safer.

» READ MORE: Renovating abandoned houses reduces the rate of gun violence, Penn study finds

In 2018, the organization petitioned for control of a home in the Graduate Hospital neighborhood that had been in Shane Randall’s family for three generations.

Randall, then a social worker with the Philadelphia Fire Department, had inherited the house from his mother in 2015 and said he and his wife, Najah Queen, planned to renovate and move in. But it took two years to get tenants out. His contractor finally got a permit to start work in April 2018. That August, the conservatorship petition was posted on the door.

A next-door neighbor, Sally Scott, said she had contacted Scioli Turco because the decaying rowhouse was causing serious damage to her home, including water infiltration that led to one bedroom being sealed off and vented to prevent her home from filling with mold.

“I was concerned about it collapsing,” she said. “It was a valid concern because when the structural engineer got in there, the ceiling had already collapsed inside from the water intrusion.”

Randall said that his engineer came to a different conclusion and that he was well on his way to fixing the house.

He fought the conservatorship, and a judge granted him six months to complete a list of repairs. Randall said he was hampered by long delays in the permitting process. Still, he fixed the roof, repointed the brick, stucco-coated the rear wall, and installed new windows and doors, spending more than $50,000, he said.

Grossman said the work Randall had done was “absolutely substandard,” and he did not fulfill the obligations set by the judge.

In the end, the judge approved the conservatorship, and Scioli Turco sold the house to a developer for $400,000. All of that went to reimburse the nonprofit or to cover its $80,000 conservator’s fee.

To Scott, the process was “more than fair,” and the outcome was a relief. She no longer lives in the house but said selling it “is a big part of my retirement plan.”

Randall, who said he lost his job because he was spending so much time in court fighting over the house, was left with tens of thousands of dollars in legal fees. In his view, the house was “stolen.”

“We don’t even go down that street anymore,” Queen said. “It was a big fight and a lot of loss.”

McClellan, the Penn Law professor, said many cases she reviewed point to a dire need for home-repair funding — which would prevent low-income owners from having to abandon their properties in the first place. She said there’s also a need to look at whether incentives in Act 135 are aligned with the law’s purported goals.

» READ MORE: Repairing all the homes in the Philly area would cost at least $3.7 billion

She points to the case of the Cox family, who were fighting a petition in a fast-gentrifying part of the city.

In that case, Parker, mobilized all of her resources, from social media to civic association leaders, to make clear that the home was not abandoned and therefore not eligible for conservatorship.

Grossman said Scioli Turco recognized that filing was in error, and withdrew it. But Parker said it never should have happened.

“As an African American family that has been able to hold and retain a home for 70 years, that someone can come into court and petition to take the house and say there’s blight — that’s the unfortunate part,” she said. “They’re stripping communities of resources.”