You Can't Make This Stuff Up

I wish I could.

So. The city owns a lot of properties around the city. Abandoned buildings, vacant lots. All over town. Every three months, the City conducts auctions of various portfolios of properties, to move these parcels off the city’s inventory and back into private, tax-generating hands. Sometimes, as in several of the Redevelopment Districts in the city, city-owned properties don’t have to be sold via auction, but can be conveyed directly to purchasers via a Council-approved ordinance.  Generally, this kind of transaction takes place when the city bundles several parcels together in a package to sell to a developer.

That’s the kind of arrangement that the Trentonian described on its website in an article posted this afternoon. Thirty-six properties in the Wilbur section have been bundled for sale to SR Development Enterprises, a  developer, at a sale price of $1 each. SR is  a subsidiary of  RJC Northeast of Glen Mills, PA (see Page 7).

According to the Trentonian story, SR plans to build “low-income” housing in the Wilbur section. A lot of people, myself included, question whether this City should be encouraging private development of low-income housing right now, but let’s leave that aside for now.

What struck me as very, very odd about this proposed sale is the unusual way the Administration is championing this sale. Typically, a proposed purchaser submits proof that they have the financial resources to go ahead and develop the abandoned properties to get them back on the tax rolls. Commitment letters, from banks or other investors, is the norm in a deal like this. In SR’s case, well, let the paper describe SR’s case:

A memo from the acting director of city housing and economic development, Henrietta Owusu, to Acting Business Administrator Elaine Adams on Nov. 16, noted that RJC Northeast “submitted a balance sheet instead of a traditional financial commitment, but in discussions with the Administration (Mack), a determination was made to proceed with underwriting the project ‘as is’ since the balance sheet demonstrated ‘cash on hand’ could be used to determine capacity to develop the properties.’’ [My emphasis.]

Let me describe, briefly, why a Balance Sheet, and the “Cash on Hand” principle are HORRIBLE ways to assess financial capability, and why it is very fishy that the City is accepting this from SR.

Let’s say that you are a company that lands a very big contract for a very big job. Your client advances you $1 Million to get going, which you deposit in your bank. Great! You have $1 Million Cash on Hand, and a Million Dollars on your Balance Sheet.

The trouble is, that $1 Million is spoken for. It is to be used for another project, say one that’s going to cost $999,000.  Your Balance Sheet may reflect that, and call the $1 Million Deferred Income, or some such, reflecting that your project hasn’t yet started. But, for all intents and purposes, in this example, that $1 Million in your bank account doesn’t tell you One Damned Thing about your financial condition, or your capacity to take on other projects.

And in today’s story about SR, using the company’s Balance Sheet and Cash on Hand tells us not One Damned Thing about SR’s capacity to develop the parcels it wants to buy from the City. So, why is the City in this case departing from its usual practice of requiring a developer to show a better proof of financial resources? How was this “determination” made? The Trentonian’s article doesn’t say. But they are very interesting questions, indeed.

Cue the Times. In an article by Alex Zdan posted online this evening, we get what may the answer to that question. A company named International Renaissance made a campaign donation of $6,000 to Mayor Mack last year, according to campaign finance reports filed with the State by the Mayor (see the middle of Page 2), and as unearthed by city activist and amateur forensic accountant/sleuth Jim Carlucci.

International Renaissance has the exact same address as RJC Northeast, in Glen Mills, PA.

It’s kind of hard to give this the kind of emphasis in print that statement deserves. Let me try again.

International Renaissance-a big campaign donor to Candidate Tony Mack last year –  has THE EXACT SAME ADDRESS as RJC Northeast – a company that Mayor Tony Mack wants to sell three dozen city properties to, for less than Forty Dollars total, and without having to show the proof of financial resources to actually develop the properties that the City normally requires !!!!!!

Was that any better? Do you see anything wrong with this?

Does the Mayor? Apparently not.  From the Times article:

Reached by phone last night, Mack said he was not aware of the similar addresses, and denied there was anything untoward about the arrangement. “No, how can it be pay-to-play?” he said. “There’s a process, companies do work, and they’re building up an area that’s desolate and needs attention.”

“There’s a Process.” I suppose there is. Yes, it surely sounds like there is a process.

Not a good one, not an ethical one, and perhaps not even a legal one. Expect to hear more on this story tomorrow, when these stories both appear in the print editions.

You Just Can’t Make This Stuff Up!