Germantown's beleaguered YWCA has encountered yet another setback as KBK Enterprises, the controversial developer chosen to redevelop the historic building, has failed to secure crucial financing – leaving the project once again in limbo and neighborhood residents demanding action.

Eight years after the Philadelphia Redevelopment Authority (PRA) awarded redevelopment rights to KBK Enterprises, a Pittsburgh- and Ohio-based developer, the building at 5820 Germantown Avenue remains untouched and deteriorating. 

KBK originally envisioned a mix of affordable housing units and commercial space with completion slated for 2019. But it has never secured financing for the project, and the latest blow came in early July, when KBK was rejected for state low-income housing tax credits. Those credits are a key component of their financing strategy, and applications are offered just once a year, so the company couldn’t possibly receive them until next spring. 

Despite this setback, KBK retains control of the property until at least the end of this year, thanks to a 12-month reservation letter awarded by the PRA in January. Frustrated neighbors wonder why the PRA is tolerating the delays. 

Meanwhile, the PRA is currently fighting developer Ken Weinstein, who has petitioned the court for control of the property under Act 135, a state law that allows for the appointment of a conservator for blighted properties. This could potentially wrest control of the project from KBK.

At its Aug. 14 board meeting, PRA chairman David Thomas said he won’t consider a new course until the court makes its ruling. 

"The project is frozen until we deal with the conservatorship," Thomas stated.

At that meeting, Thomas also told neighbors that the organization had only learned of KBK's failure to secure credits two weeks earlier, and is currently trying to schedule a meeting. 

"We've reached out to them, and we're waiting to schedule a date so that we can call them in for a debrief," Thomas said.

This revelation prompted Yvonne Haskins, co-founder of Friends for the Restoration of the Germantown YWCA Building, to question the PRA's urgency and lack of concrete deadlines.

"You're just going to let that sit for the next six months?" Haskins asked during the meeting. "I would think that after eight years you would have something more definite."

A tortured history

The PRA loaned nonprofit developer Germantown Settlement $1.3 million to buy the building in 2006 and was forced to repossess it in 2013 after that organization went bankrupt. Germantown Settlement did not pay anything toward that loan and did not make any progress on its redevelopment. 

Then, in November of 2016, the PRA awarded development rights to KBK.

When Haskins inquired about the PRA's policy regarding developers who repeatedly fail to demonstrate financial capacity, Thomas admitted, "We don't have a policy."

Ann Marie Doley, another co-founder of the group, argued that KBK's track record and lack of experience with adaptive reuse projects make the company ill-suited for the job.

"It's not that they're incompetent, but they're not from Philadelphia, and their main track record is with new construction," Doley said. "They have no track record for adaptive reuse. So what we have been trying to say to you for a long time is that this pick might have been a mismatch."

Doley recalled a community meeting last October where both KBK's CEO Keith Key and City Councilmember Cindy Bass had emphasized that the state tax credits were the final piece needed to begin the project.

"The credits were key to their financing – he said that and so did Cindy Bass – and that it was the last thing they needed in order to make this happen," Doley said. "Then they said they would start construction this fall, and that the building would be finished by the end of 2025."

With the recent rejection, KBK won't be eligible to re-apply for tax credits until next year, potentially pushing the project timeline even further into the future.

"At a certain point there has to be a deadline!" Doley exclaimed. "It seems very unfair to the community to be constantly extending deadlines for a developer who has shown over a period of time that they can't secure the financing."

Thomas told Doley that he “did not disagree.” But, he said, there’s nothing he can do. Bass, who represents the district and has been a staunch supporter of KBK, has the power to block other developers from obtaining a contract for the property.

That power, known as councilmanic prerogative, is a tradition under which the city’s 10 council members who represent geographic neighborhood areas have the final say on land-use decisions in their districts.

“I don’t do anything in a vacuum without consulting with elected officials,” Thomas said. “It does not behoove us to issue an RFP that we know will not be accepted.”

In an email statement, Bass said on Monday that she continues to support KBK.

“At this time we are aware that the developer is exploring other funding alternatives for the Germantown Y project and are waiting to hear back from them on the success of those efforts. We do still maintain that KBK Enterprises is the right developer for this project as a Black-owned business operating with the best intentions for a majority-Black neighborhood like Germantown,” the statement read. 

Pam Bracey, a longtime Germantown resident who is part of the SoLo Germantown Civic Association, closed the neighbors' comments with a plea for decisive action by the agency. 

"This was the first racially integrated facility in the city, and maybe even the country. It has a long history and to tell us that you're waiting to hear and all of that sounds really disingenuous to us," Bracey said. "We really hope that you are listening to us. This has been going on for eight years plus. It seems as though we aren't being listened to. You are all annoyed and we are annoyed but, somehow this has to be worked out."

The next scheduled PRA hearing is Sept. 11. The next court hearing for Weinstein’s ACT 135 petition is Sept. 12.