The Philadelphia Housing Authority sold 100 properties and brought in more than $4 million at this week’s vacant property auction with both positive and negative reaction to the sales.
In November, PHA held its first vacant property auction, which sold 400 vacant properties and brought in $7 million. The auctions are part of PHA’s attempt to sell some of its approximately 4,000 vacant properties, some of which it has owned since the 1960s and 1970s.
According to the housing authority, the goals of the two auctions are to reduce blight and to generate revenue that PHA will invest in its other properties and public housing programs.
Local residents have had mixed reactions to the two auctions.
At the time of the first auction, many residents and community groups were upset that properties were sold in bundles of anywhere from two to 25, as they said this made it difficult for smaller buyers to purchase specific lots. In response, PHA held the second auction in which each of the 100 properties was sold individually.
Approximately 260 registered bidders attended this week’s auction, and each of the 100 properties sold for between $9,000 and $320,000.
Troy Nelson, a Philadelphia-based builder and developer, attended the second auction in hopes of purchasing six specific properties in the Fairmount area.
“We’ve been waiting for PHA to start selling because PHA has been holding some [of the properties] for a long time,” he said.
Nelson said he thinks the sale will be good for the neighborhoods because some of the properties have sat for years and brought down the value of entire blocks.
Others attended the auction out of curiosity.
Paul Marcus of Marcus Reinvestment Strategies LLC, said the auction was exciting because “for a long time PHA hasn’t made their assets available for community groups and individual developers.”
Under the terms of both auctions, the new owners must agree to improve the properties within five years. While Marcus said he thinks the auctions are good and that it is the most public way of selling these properties, he said he will be surprised if, in five years, PHA enforces the improvement clause.
“I think a number of the properties won’t be developed, but for the properties in the nicer areas, developers will find the finances,” he said.
Ainé Doley said she is also concerned that PHA will not enforce the improvement clause and that the lot that was sold on her block will continue to sit vacant.
Doley and her sister Emaleigh, two lifelong Germantown residents, are dedicated to improving and maintaining their block. To date they’ve partnered with the Philadelphia Horticultural Society and Keep Philadelphia Beautiful and received a Neighborhood Transformation Award for their block beautification efforts.
Their next project was to turn three vacant lots into a teaching garden that they hoped to open to the community, a local school and a neighboring church. Doley said they were surprised when one of the lots was listed for auction at this week’s sale.
Doley said she cannot afford to purchase the lot, but she attended the auction to see if she could prevent the Greene Street lot from being sold. Before the auction, she contacted the City of Philadelphia Licenses & Inspections, the U.S. Department of Housing and Urban Development and PHA in hopes of removing the property from the auction list. She heard back from all but PHA.
“We really ask that they not sell it,” she said. “I don’t see why anyone would want it, but look at how many people are here.”
While Doley waited for the auction to begin, her mother told her via text message, “You are brave and fearless. You must stand up and object.”
Doley was not able to prevent the sale of the Greene Street lot. Bidding on the property started at $150, and it sold for $10,000.
“I don’t think it’s the right choice that PHA is allowed to auction these properties without talking to the neighbors,” Doley said. She submitted her name as an alternate buyer and said she will continue working to secure the property for a community garden.
Michael Alhadad and Sudan Bey, two property investors, said they were happy with the auction.
Bey did not purchase any properties, but he said he was happy that PHA has decided to sell the properties because “they [were] just holding them. They’re not doing anything with them.”
Given the list of people in need of homes in the city, he said, “This is a great opportunity that Philadelphia provides.”
Alhadad, a real estate investor who owns property in Philadelphia, attended both auctions. At the first, his team purchased two bundles for a total of seven or eight properties, he said. At the second, he was looking to purchase between five and 10 properties.
Both Bey and Alhadad said they would prefer that the properties be sold in bundles.
“I wish they were bundled,” Bey said. “You just weed out the non-serious people. If you’re an investor, you want people in the game who can actually make something happen.”
“[The auction] is a good opportunity because you pay your price, and they put these lots that people aren’t doing anything with [up for sale],” Alhadad said.
“For me I think to buy a bundle is better,” he said. “If I buy a bundle the price goes higher and [fewer] people are [bidding against me].”
Robert Dann, executive vice president and chief operations officer of Max Spann Real Estate & Auction Co., the company PHA hired to run the auction, agreed that it is important to have serious buyers.
“In my mind the worst thing that could happen would be for someone to buy [property] who didn’t have the money to fix it up,” he said.
As with the first auction, a majority of the properties sold this week are concentrated in North Philadelphia.
Before both auctions, Michael Johns, the general manager of community development and design at PHA, said this is because the majority of PHA’s vacant properties are located in North and West Philadelphia. Johns said the auctions were a pilot program, and that PHA is seeking the best way to return some of its vacant homes and lots to private ownership.
Dann said PHA and Max Spann will likely hold another auction in the early spring. He said interested bidders can check the Max Spann website for more information.
“Hopefully we made it a nice, easy, efficient way for people to buy properties,” he said. “That was the goal.”