City officials recently blamed a clerical error, in part, for allowing a friend of Councilman Kenyatta Johnson to secure two city-owned lots without bidding this summer and then flip them for a cool $165,000 profit at taxpayers' expense.
The Inquirer and Daily News have found it was not the first time that city records inaccurately reflected the details of a no-bid land sale to the developer, Felton Hayman.
In the lead-up to a 2016 purchase of three Point Breeze lots by Hayman, records maintained by the city committee that cleared the transaction failed to show that other potential buyers were interested in the properties. They also mislabeled Hayman’s intentions for the lots, describing them as “side yards” not to be developed. Side yards are typically sold at a lesser price to immediate neighbors, which Hayman was not.
The inaccuracies were eventually flagged by the head of the Philadelphia Redevelopment Authority and corrected before final approval of the deal. Still, the sales went through without the required competitive bidding or appraisals.
The discovery of the inaccurate records follows a report last month in the Inquirer and Daily News that the city sold three other Point Breeze properties to Hayman in August at below market rate prices, after incorrectly listing Hayman as the only developer to have expressed interest in the lots. Officials later acknowledged that the city had received a total 16 expressions of interest for the properties in that deal.
In that case, a spokesperson for the city's landholding agencies blamed a clerical error. Under city guidelines, interest from multiple developers should have triggered competitive bidding to ensure that taxpayers received the maximum value for the land.
Mayor Kenney acknowledged that the sale was flawed but saw no need for disciplinary action.
"I'm told this was human error, inadvertent," Kenney said in a statement responding to the report. "In this instance, I fail to see why you'd discipline someone for making a mistake."
Kenney, at that point, was unaware of the other inaccuracies since uncovered.
In October 2014, Hayman told the city's Vacant Property Review Committee that he wanted to buy a lot on Ellsworth Street and two on Manton Street to "build three-story homes for affordable housing," meeting minutes show. Johnson provided a letter of support for the project. With little discussion, the committee approved the sale to Hayman for a combined price of $70,488 – less than half the fair-market value of the property at the time.
Despite Hayman's stated intent to build on the lots, the committee recorded that deal as involving "side yard" sales. That designation refers to the sale of a lot to a neighboring resident for use as a yard, not development. Lots sold as side yards are typically priced lower than those to be developed.
The committee also did not record, as required, the number of individuals or entities that had expressed interest in buying the lots. In this instance, two of the properties each had 20 expressions of interest.
Emails from January 2015 show that the head of the city's Redevelopment Authority (PRA) was concerned about the inaccuracies and questioned why the properties were being sold without appraisals.
"They're listed as side yards but [Hayman] doesn't live adjacent to the parcels," Brian Abernathy, then the executive director of the PRA, wrote to Susie Jarmon, the chair of the Vacant Property Review Committee. "Additionally, the number of [expressions of interest] isn't listed. Could you provide more detail on the transaction and why it's being sold w/o an appraisal?"
Minutes later, Jarmon sent a response. The punctuation is hers: "I'm out sick today. As for felton hayman these are for development
… I will let you know how many applicants on the felton deal
I thought all of the forms were completed I guess I will have to check these to"
Abernathy forwarded Jarmon's response to Tania Nikolic, then the PRA's deputy executive director. He added one word: "Sigh."
"I am sorry – what!?@!" Nikolic wrote back. She said she felt uncomfortable presenting the sale to the PRA's board and asked that she not be asked to present future items from Jarmon's committee.
Two days later, Abernathy emailed Jarmon to say that she should postpone the Hayman sales.
"I'm willing to take the hit with w/Kenyatta [Johnson] if you need me to," he wrote.
Eight months later, the committee corrected the records to show that the proposed sales were for "new construction" and "development," and there were 42 expressions of interest among the three properties. The sale went through in January 2016 at below-market prices and without bidding or appraisals.
While Hayman had told Jarmon's committee that he would build homes for "under $250,000," they sold for between $325,000 and $415,000.
Abernathy, now the city's first deputy managing director, declined to comment on the sales. Nikolic, who now works at Amtrak, did not respond to a request for comment. Nor did Jarmon.
Kenney's office could not provide an explanation for why the sales were initially mislabeled or sold without bidding or appraisals.
Responding to questions about the profit Hayman made with the quick re-sale of the city lots he purchased in August, Kenney placed some of the blame on City Council, which must approve sales of city-owned property. Under the unwritten tradition known as "councilmanic prerogative," Council members can veto development projects in their districts.
Kenney told WHYY's RadioTimes host Marty Moss-Coane last week there is little he can do about that.
"Councilmanic prerogative will only be ended by Council," he said. "What you have is a political dynamic where the 10 district Council people will not vote against what another district Council person says in terms of a development or property or land distribution."
Council President Darrell Clarke, who appointed Jarmon the chair of the Vacant Property Review Committee, declined to comment on the committee's actions in the Hayman sales. In a statement, Clarke's office said he was trying to streamline the city's "disjointed approach to public land use and disposition."
Johnson, whose letters of support essentially ensured Hayman would get the properties he sought, issued a statement saying that he was not aware that the vacant property committee had initially mischaracterized the sales. He said the errors "show once again that the system is broken."
"The Councilman believes that he has an obligation to his constituents to ensure that development balances the needs of longtime residents and new residents, and to make sure that everyone has a voice in how their community is developed," the statement said. "When the city fails to compile and distribute accurate information regarding city-owned property, we end up with deals that shortchange the people of Philadelphia."
Hayman, who grew up with Johnson, said he, too, was unaware that the paperwork for the sales had been incorrect.