SCOPE: Selling City Owned Property Efficiently
astella | June 15th, 2009 | No Comments »Nutter Butter Post by Rachel Lipton
You might notice that Today’s Nutter Butter does not directly refer to our great city’s Mayor, but instead the focus is on a project that the REALTORS of Philadelphia have come up with to help the RDA (Re-Development Authority) and other city agencies sell blighted properties to bring in much needed tax revenue and perhaps help push these hard to swallow budget proposals to the back burner.
Realtors helping sell government-owned vacant properties
By Jennifer Lin
Inquirer Staff Writer
Al Perry sells houses for a living, so it bothers him to see a boarded-up shell or overgrown lot that is owned – and ignored – by the city. As president of the Greater Philadelphia Association of Realtors, Perry is working on an idea that could help the city reduce blight and raise money.
It’s marketing: Use Realtors to sell some of the 11,000 vacant houses and lots owned by government entities.
The Philadelphia Redevelopment Authority, which owns about 3,000 of those properties, is testing the idea. So far, officials like what they see.
Terry Gillen, the RDA’s executive director, said that for the first time, the authority had listed properties on the region’s multiple-listing service. Five are in Southwest Philadelphia and two in South Philadelphia.
Realtors with three agencies, including Perry, also are showing houses to prospective buyers – another first for the RDA.
“With its scattered small properties, the RDA is not in the habit of going after sales,” Gillen said. If it owns a lot or an empty house, a prospective buyer would have to comb city records to find that out.
As part of the pilot project, the RDA also has listed 12 properties on its Web site to measure public interest. Offers have been made on half of them.
The RDA intends to post online the address of every vacant property this summer.
“Realtors, meanwhile, are advising the RDA on how to simplify its paperwork and make buying a property from the agency easier. In addition, they are giving advice on pricing,” Gillen said, for they tend to have a better grasp of whether appraised values are too low or too high.
“We definitely want to try to take this project to the next level,” Gillen said. “We’d like something bigger than the pilot by this fall.”
For decades, blight has been a challenge for Philadelphia mayors and redevelopment officials.
The city has about 55,000 vacant properties and lots, of which government entities own about 20 percent, according to new data from the Pennsylvania Association of Realtors.
The RDA has 2,920 vacant properties and lots, the association said. Many of those decrepit assets were acquired in the 1950s and 1960s for redevelopment plans that did not materialize.
There is “immense interest” among Realtors in Philadelphia in collaborating with the RDA and “cleaning up city streets,” Perry said.
In the pilot, which began in February, the Realtors were given five houses and two lots to market, ranging from $19,900 to $43,700. The lots, in the 1200 block of Webster Street in South Philadelphia, are under agreements of sale and could fetch $17,400 more than the RDA had expected. The agent will earn $2,500 or 6 percent of the sale price, whichever is lower.
Under terms of the sale, the properties must be redeveloped within 18 months.
Philadelphia Realtors borrowed the program idea from Baltimore, which has 30,000 vacant houses and lots.
Baltimore calls its program SCOPE – Selling City-Owned Properties Efficiently. Since 2005, 263 sales have been transacted, raising $6.6 million for the city.
Joseph Landers III, executive vice president of the Greater Baltimore Board of Realtors, said, “The city didn’t think its property had any value. Our members said, yes, it did.”
To deter speculators, Baltimore requires that the nonprofit Community Law Center review each sales agreement. The law center checks finances and searches for outstanding judgements or housing-code violations. Robert Strupp, a lawyer for the center, said that, to date, no property had gone into foreclosure.
SCOPE, too, requires buyers to rehab properties within 18 months. The city pays a broker $2,500 or 8 percent of the sale price.
Philadelphia City Council wants to know more about the Baltimore program.
“If it worked in Baltimore, I don’t know why it wouldn’t work here,” Councilman James F. Kenney said.
One big difference between the cities is the political component. In Baltimore, sales of city property require approval by the Board of Estimates, which sets fiscal policy and includes the mayor and president of the council.
Here, state law dictates that any sale by the RDA go before Council for approval.
For the pilot program, Council President Anna C. Verna and Councilman Frank DiCicco gave their advance approval of sales.
Urban redevelopment experts say that for the Baltimore program to work here, Council members must be willing to pre-approve locations to sell in their districts, as well as the uses for the properties. Otherwise, if Council can derail sales, buyers might be reluctant to make offers.
