Man claims city pushed him off land to help favored project

ON A crisp Sunday afternoon in 2006, as summer eased into autumn, Leroy Sterling showed potential investors the site of his American Street dream: a vacant lot that he had bought on the barren, drug-ridden corridor in Kensington.

After more than three years of delays securing permits, Sterling was finally ready to move forward with plans for a garage for his masonry business, where he would also teach bricklaying, carpentry and other building trades to young, unemployed people.

As Sterling was selling his vision, a man who said that he was one of the owners of the Crane Arts Building - a former plumbing factory across the street that had been renovated into studios, offices and exhibit space - walked over with his little dog.

The man asked about the plans for the land, which Sterling had bought from the city in 2002. The man then told him, "I want your lot, to make a smaller version of what I have across the street," Sterling said.

"I thought, 'Oh, he's real cocky,' " said Sterling, who added that he soon started receiving calls pressuring him to sell the lot back to the city. "He acted like what I was going to do was nothing."

Now, Sterling's dream is in shambles.

The city Redevelopment Authority took back the lot in 2007. The RDA never returned his money, Sterling said, then sold the lot in 2009 to the owners of the Crane Arts Building.

Sterling alleges, in a lawsuit that he filed recently, that city officials with close ties to Crane Arts selectively enforced policies to push him out and make way for a favored project.

Besides the RDA, the suit also names the city, the Philadelphia Authority for Industrial Development and Crane Arts as defendants.

"As a matter of policy, we are not going to comment on a matter in litigation," said Mark McDonald, a spokesman for Mayor Nutter.

During a second call to Crane Arts for comment, a woman who answered the phone said that officials had talked with lawyers and decided not to talk about the case.

You'd be hard-pressed to find anyone who thinks that Crane Arts is bad for the neighborhood.

A longtime community activist in the area, who didn't want to be named, called the arts project "a big safety anchor."

"It's activity on American Street," she said. "It's brought people to the neighborhood, including some people who come here to live."

She said that the building has concerned some residents who fear that gentrification could price longtime residents out, but she noted that Crane Arts has sparked economic activity, including a few other design businesses.

The new development also reminded people that American Street was once known as "the workshop of the world," full of artisans and craftspeople living and working there, she said.

But Sterling maintains that his project would have been good for the neighborhood, too.

Sterling, 49, started his own masonry business in 1998, running it out of a garage on Master Street near 18th.

Young men began to come by to ask for jobs, Sterling said. Sometimes, the mothers of teenage boys would walk over to see if their sons could learn a trade. He said that he taught about 10 men, and four became union journeymen after apprenticeships.

His success with students spurred him to consider creating a formal school, and American Street was ideal.

"When I first rode around there, everything was abandoned," said Sterling, a former Marine known to associates as Lee. "The Crane building across the street was abandoned. There was nothing going on in the area."

In September 2002, Sterling paid about $10,800 for the 10,829-square-foot lot on American near Jefferson. He said that city officials promised to help him, telling him that his plan " 'fits right into the scope of what we're trying to bring [to the corridor]: small businesses that would hire people from the community.' "

The corridor was in the American Street Empowerment Zone, part of a federally funded program to lure businesses to struggling neighborhoods with loans and tax incentives. The American Street zone got $16.1 million, almost half of which was put into a financing agency that eventually came to be called FINANTA.

Even so, Sterling didn't want to use the tax credits, which is why he was showing the land that day in 2006 to Alex Boyd and his wife, who own a real-estate company in Maryland but grew up in Philly.

Then the Crane Arts official came with his dog, saying that he was close with Vincent Dougherty, who at the time was an assistant director of the city's Commerce Department.

"We were kind of taken aback," Boyd said in an interview. "We told Lee to be careful. We were concerned because Philadelphia is a city where anything can happen. They can just take your stuff."

Dougherty "began pressuring [Sterling] to complete the work on the Premises, employing extraordinary means including but not limited to calling at his residence to exert pressure," Sterling's lawsuit alleges.

Sterling said that Dougherty called his home about 8 one night and "it scared my wife. We didn't think people conducted city business by calling people at home."

The next night, Sterling said, Dougherty called him on his cell phone about 8 p.m. and asked him to consider selling the land back to the city. Sterling said that he complained about the after-business-hours call and hung up. Dougherty declined to comment on the allegations, referring questions to the mayor's press office.

[]Within a year of Dougherty's calls, the RDA had seized Sterling's property. Public records show that the parcel was sold to Crane Arts in 2009 for $70,000.

Sterling's lawsuit alleged that the city, the RDA and Crane Arts did not pay him for the land or the expenses that he had incurred trying to develop the property.

"Anytime someone takes your property and don't think about giving you any money for it, that's theft," Sterling said. "It makes me feel like they [city officials] looked at what I was trying to do, they said, 'The hell with that, scratch that plan.' "

Dougherty wasn't the only close tie between Crane Arts and people in city government.

John S. Di Giorgio, Sterling's lawyer, said that at the time that Sterling's property was sold to Crane Arts, one of its founders, David Gleeson, sat on the board of directors of FINANTA.

Also sitting on the board were two public officials: David Ortiz, with the City Planning Commission, and Dana Hanchin, the RDA's director of neighborhood stabilization.

Hanchin said last week that she no longer sits on the FINANTA board. But Ortiz said that he is now the board's president. Ortiz said he believed that Gleeson joined the FINANTA board only last year. Di Giorgio said that he plans to depose all three to ask whether their joint membership on the board had anything to do with the RDA's decision to sell Sterling's property to Crane Arts.

No one at the RDA would comment about the case, but Di Giorgio said that the RDA had told Sterling that the agency had the right to seize his property because he defaulted on his agreement to develop the land within a reasonable amount of time.

But city officials have said that in the past the RDA may have selectively enforced those rules.

Take, for example, the case of the lot at 18th and Vine streets. A developer bought that parcel in 1986 but it wasn't until this year that the city moved to take it back, after the developer had arranged for the Church of Jesus Christ of Latter-day Saints to build a temple there. He previously made several attempts at building housing.

Sterling said that the city was uncharacteristically strict with his lot regarding other codes as well.

He claims that he had to hire a landscaper to maintain the lot after getting a $300 ticket every time he let the grass grow six inches high. Eventually, he pulled out all the grass.

During a recent visit to the lot, he pointed out the chest-high weeds in an adjacent plot.

"But nobody is out here cutting their grass and giving them fines," he said.

Both Sterling and his attorney said that city officials must have decided that the masonry business no longer fits the image of this part of American Street, with its artists' studios only a short walk from the glitzy Piazza at Schmidts, on 2nd Street just south of Girard Avenue.

"I'm just guessing that the development objectives and ideas of the city changed to more of an upscale area," Di Giorgio said.

Sterling's lawsuit alleges that various city agencies put obstacles in his way by delaying building permits and requiring him to have individual lots consolidated into one deed, among other stumbling blocks.

Kenneth G. Brinkley, a retired architect who had worked for the School District of Philadelphia, said that he began applying for building permits within a month or two after Sterling bought the property.

"We got the zoning permit eventually, but when we went back for the building permits, that's when we started getting jammed," Brinkley said, adding that the delays persisted after the Crane project had begun. "I felt that they delayed us. For whatever reason, they were causing us delays for the plans. . . . It would have been a positive facility in terms of the city of Philadelphia to help young people - black, white and Latino - to get jobs."

The city's and RDA's legal filings in response to the lawsuit deny all of Sterling's claims, including that he was promised help to open his business and that city agencies delayed permits.

The suit alleges that by taking his property, the city violated Sterling's constitutional rights under the 14th Amendment and the Civil Rights Act of 1964.

"They gave him notice [of the default]," Di Giorgio said, "but they didn't give him a hearing."

Erika Tapp, director of the Kensington South Neighborhood Advisory Council, said that Crane Arts has been a plus for the neighborhood. The advisory council and Crane Arts recently co-sponsored a community-arts festival geared for children.

"The Crane Arts Building is a really good asset," Tapp said. "We really value the artists. [The Crane] is a terrific resource for this neighborhood.

"But I'm sorry to hear that this guy [Sterling] got ousted," Tapp added. "It's a shame you can't have both. . . . We need the Crane building and we need people who are going to come in and do business that will pay people."

Sterling said that he still hopes to open his masonry business and school on American Street.

"I still want this plan to go on right now," he said. "That's an excellent place right there. It's easy to get to, with public transportation and everything."

In the meantime, he's paid thousands of dollars in rent because he sold his North Philadelphia garage to help pay for the American Street project.

And he's just plain discouraged.

"We were powerless," he said. "We couldn't make [the city] make it happen. If they didn't want it to happen, who could we go to?"