The Philadelphia Redevelopment Authority is mulling whether to forgive some $1 million in back interest and penalties owed by several companies linked to a former nonprofit executive who misappropriated millions in city funds.
The government agency has long offered low-interest loans to not-for-profit developers to support the creation of affordable housing. One of those groups, Germantown Settlement, was shuttered in 2010 after revelations that its president, Emanuel Freeman, had squandered an unknown percentage of some $100 million in city funds directed to the group over a 20-year period.
The group was later dissolved, but its debts to the city were not. A PRA spokesperson says holding companies linked to the defunct nonprofit owe the city more than $4 million loaned to it to support low-income housing.
Today, the various companies holding what was left of Germantown Settlement – which are still controlled by Freeman and his wife – own dozens of properties in varying states of disrepair across Northwest Philadelphia. Many are on the verge of being put up for sheriff’s sale over unpaid tax bills.
Jamila Davis, a spokesperson for the PRA, said the forgiveness deal would enable the agency to finally recoup some of the money loaned out for affordable housing years ago.
“We have a duty to recoup the federal funds that we invest into affordable housing so that we can support future affordable projects,” she explained. “In the case of the Germantown properties, we determined the project could probably not support anything beyond repayment of principal, if even that.”
Unless a deal is quickly brokered with Freeman, according to the PRA, the properties could be sent to government auction and sold off to unknown buyers. Any obligation to repay money to the PRA would evaporate upon that transaction.
“In other words, if we required the developer to repay the principal plus interest, we are pretty confident we would never get repaid at all,” Davis said.
But Irv Ackelsberg, who served as legal counsel to the community group Germantown Community Connection during its past battles with Freeman, called the request a sham. While the PRA says Freeman has a legal claim to the properties, Ackelsberg argues that Freeman’s landlord role should have dissolved along with Germantown Settlement.
“It would be a fraud on PRA and fraud on the neighborhood” to confirm Freeman’s claim as a legitimate owner of properties, he said. “He’s robbed the city of so much over the years.”
Freeman has twice approached the city in the past with offers to repay the principal on the loans, which totals some $3 million, if the PRA agrees to drop $1 million in interest and penalties. According to the PRA, he has twice reneged.
In February, Freeman once again appeared at a PRA board meeting with a man he described as an investor in tow, encouraging members to consider a third forgiveness proposal, which was tabled by the PRA. He has pledged to renovate the dilapidated properties.
“The resolution that was tabled at the February Board meeting would have had the applicant repay PRA its full principal due on four loans, with a total repayment amount of $3,355,636, and PRA would then have agreed to forgive a little over $1 million of interest,” said Davis in an email. “The applicant also represented that if they were able to close on their financing they will be able to additionally pay off a significant amount of owed taxes and other municipal payments, including water bills due.”
Ackelsberg said he doesn’t believe Freeman intends to spend a dime on renovations.
“I don’t think there’s any reality to his interest,” he said. “It’s a lot of baloney.”
Founded by Quakers more than a century ago, Germantown Settlement used its political influence in the late 20th century to win millions in city funds earmarked for educational and economic development efforts in Northwest Philadelphia. Then, in the late 2000s, a series of school district and federal audits revealed millions in missing funds directed to Germantown Settlement and two related groups.
While Freeman avoided criminal charges, the ensuing scandal eventually led to the dismantling of the nonprofit in bankruptcy court.
Freeman would later relocate to Bear, Delaware, where he still resides, continuing to collect rent from properties built with city backing by his old nonprofit. In 2016, he made headlines for leaving his tenants out in the cold after he failed to pay some $60,000 in heating bills.
Davis said a decision to forgive outstanding interest and penalties owed by those two corporate entities would occur within three to four weeks – after the agency vetted Freeman’s latest proposal.
“In the case of the Germantown properties, we have questions about the viability of the applicant’s proposed renovation, and whether the funding the project can support is sufficient to cover the extent of the work required to bring these properties up to a decent standard,” she said.
While the city is looking to make the most of a bad situation, neighbors like Allison Weiss, whose properties abut dilapidated former Germantown Settlement buildings, have actively protested Freeman’s proposal at a recent board meeting. Weiss cited the abhorrent condition of the properties under Freeman’s current stewardship and his long history of damaging neighborhood interests in explaining her opposition.
“It’s crazy that it’s gone on for this long and that the community can’t do anything about it,” she said. “These projects were supposed to uplift the community and instead they’re doing the exact opposite.”