Contrarian: Digging More Holes

IN THE EARLY 1990S, I WAS A CRAB FISHERMAN IN ALASKA, and between trips we would stop in Seattle. I remember going to a coffee shop there called Starbucks and thinking, “Someone should open one of these in Philadelphia.” And a few years earlier, when I was an EMT in North Philadelphia, I remember driving around Northern Liberties and thinking, “Someone should really renovate this neighborhood.”

Based on those two thoughts, I’ve come to consider myself a visionary in the world of investment. Before you call me for advice, though, you might want to know that I also consider myself a legal scholar because I’ve seen a hundred episodes of Law & Order. And you might also want to know that while driving around North Philadelphia as an EMT, I didn’t just imagine renovations for Northern Liberties, but also for six or seven other areas in North Philadelphia, all of which, 20 years on, are still utter wasteland.

Philadelphia’s wastelands are unique. For one thing, they are everywhere, like cancerous lesions that have sprouted all over the city. Chicago has its South Side, Boston its South End, L.A. the South Central neighborhood, but our blight can be found anywhere you look. Southwest Philly, Germantown, Strawberry Mansion, West Philadelphia, Kensington, Mantua, and, of course, North Philly all sport block after block of abandoned and burned-out houses with trash blowing across deserted lots. And unlike those other cities, where slums can only be seen from trains and freeways, our wastelands are highly visible. Just a few blocks from the city center, the Divine Lorraine Hotel sits right on Broad Street, a 10-story Victorian monstrosity that’s been collecting mold for a decade, welcoming tourists to the desolation of Ridge Avenue.

Recently, the media have made a lot of the revitalized downtown, with its increased foot traffic and retail space, but through yet another administration, our blighted neighborhoods have gone virtually untouched. According to a study from 2000, Philadelphia had the highest rate of abandoned buildings per capita in the country, and it sure doesn’t appear that anything has changed — our vacant lots cover an area the size of Center City.

It’s not as if City Hall is unaware of the problem; in fact, it used to be the Street administration’s signature issue. We have the Redevelopment Authority, the Empowerment Zone, the Keystone Opportunity Zone, the Girard Coalition, the Neighborhood Transformation Initiative, the Vacant Land Stabilization Project, and some half a dozen more government or community groups. They’ve accomplished next to nothing in the past 20 years.

This is government at work: The federally funded Empowerment Zone began a project in the mid-’90s to build an arts center, to be named after jazz great Billie Holiday, near Temple’s campus. They dug a huge hole in the ground, then cancelled the project and filled it back in again, which cost $1.5 million. Now it’s a vacant lot. Meanwhile, the NTI, the most ambitious of Mayor Street’s projects, began in 2001, with a $250 million-plus budget, to raze and replace abandoned city buildings, starting in Strawberry Mansion. Hopefully, not much of that money has been spent, because a recent stroll through Strawberry Mansion revealed no significant change since I worked there 20 years ago. A few empty lots have been seeded and had their ugly chain-link fences replaced by wooden ones, but I could have done that myself on a few Sunday afternoons.

In City Hall’s defense, work has often been stalled because fear of gentrification has prompted activists in some devastated communities, specifically Strawberry Mansion and Mantua, to protest neighborhood improvements. When neighborhoods get gentrified, the working poor get shoved aside, because property values increase and they can no longer afford to live in their own homes. This was averted in Northern Liberties because the properties went up in value very slowly, having first been rented to what real estate agents call “artists” before becoming fully gentrified. (“Artists,” apparently, is a generic real estate term for white people who don’t mind having black neighbors. If there were really that many artists, we’d have a gallery opening every nine hours.) Small developers rebuild by fixing up one building at a time; after a few years, there’s a thriving mix of all income levels.

One such small developer is Stephanie Singer, of Wise Acre Real Estate, who has been quietly buying dilapidated houses in Strawberry mansion, and renovating and renting them. When I meet with her, she has just come from the Housing Authority, where she was sent away after a three-hour wait because she didn’t have the right paperwork. She doesn’t seem as furious as I would be. Dealing with city government must require a certain inner peace.

Singer doesn’t “flip” houses. Rather, she invests in them, and the run-down neighborhoods, long-term. With the housing market going soft, flipping no longer really makes sense, she explains:     “Most real estate investors and developers work on short timelines. They want to get their money — or tax credits, or tax losses — back in a year or two.” The bigger developers can’t afford to take the time to allow gradual neighborhood change.

And the big developers downtown get huge tax breaks. For small developers, it’s pay-to-play. “For a developer to get access to a property, he must get the consent of elected politicians, which is not always straightforward,” Singer says, mastering understatement.

I believe that city government really wants to clean up bad neighborhoods; it just gets distracted. It knocks down an abandoned building here, puts up a wooden fence there, then starts daydreaming about all the profit that will flow in from the Comcast Center and a revitalized downtown. Watching city government solve the problem of urban blight is like watching a recalcitrant teenager forced to tidy up the garage; he keeps throwing down his work tools and running off with his friends.

There is only one way to improve our blighted neighborhoods. Not with ambitious programs from City Hall that inevitably end in squabbling, bungling or outright greed, but with a slew of small investors, who build the city back one house at a time.

As the Democratic primary approaches, the mayoral candidates should be looking at the track record of impotence of the last five administrations and debating the serious changes that need to be made. Rather than announcing grandiose, Mao-like Five-Year Plans, the city needs to encourage small companies like Wise Acre Real Estate. Reducing the byzantine bureaucracy that creates three-hour waits, and offering tax incentives to people other than millionaires — that would be a good start. It’s time to recognize that small investors who are willing to take chances are the only ones who will ever make a difference. On his first day in office, the next mayor should appoint a red-tape-busting czar whose sole responsibility is to do nothing but actually help developers get their projects rolling. Now that would be doing something.