400 S. 40th Street, designed by Samuel Sloan | Photo: Peter Woodall
The Philadelphia Historical Commission voted 6-3 on Friday to allow the University of Pennsylvania to demolish a Samuel Sloan-designed Italianate mansion on 40th and Pine. The Commission’s decision was the latest twist in a five-year battle over the building’s fate.
The mansion is listed on Philadelphia Historic Register, which protects it from being torn down unless the owner can prove financial hardship. UPenn had purchased the former retirement home at 400 S. 40th St. for $1.7 million in 2003, however a university-commissioned study completed later that year showed restoring the building by itself wouldn’t generate enough return on investment to attract a developer.
In 2007, UPenn backed developer Tom Lussenhop’s plan to restore the mansion and build 11-story hotel on the property. Later that year, however, Lussenhop petitioned the Historical Commission to remove the mansion from the Historic Register, which would have allowed him to raze the building. The Historical Commission denied the request, so Lussenhop returned to the original plan, which was shot down by L&I’s Zoning Unit and neighborhood opposition.
In 2011 the university and new investor Equinox Properties proposed restoring the mansion and building a seven-story apartment building on the property. Although the Historical Commission approved the plan, UPenn decided to scrap the plan rather than try to push it past neighbors and a neighborhood group, the Spruce Hill Community Association (SHCA), which opposed the plan.
Believing that a taller building was no longer politically feasible, university officials argued that tearing down the existing building and replacing it with a five-story, 122-unit apartment building was the only plan that offered enough of a return on investment for Equinox–plus the non-opposition of the SHCA.
400 S. 40th Street in 1963 | Photo: PhillyHistory.org, a project of the Philadelphia Department of Records
So what is a reasonable return on investment? Penn told Real Estate Strategies, Inc., the consultant hired by the Historical Commission to determine financial hardship, that Equinox Properties required a minimum 11 percent cash-on-cash return on equity to develop the project. Margaret Sowell, President of Real Estate Strategies, said that her research showed that even in today’s volatile market, 11 percent was at the bottom end of the range for an equity investor on a project with this amount of risk.
Attorney Paul Boni, who represented neighbors who oppose demolition, argued that as a nonprofit, the university does not need the same return on investment as a private developer, since the apartment building furthers institutional goals. “How much does Houston Hall earn? How about the library, what are their late fees like? An 11.5 percent return on investment? Penn’s mission doesn’t talk about making money.”
Boni testified that Penn’s Master Plan calls for no development west of 40th Street (the Sloan mansion is on the west side of 40th Street). “It doesn’t fit the university’s master plan or mission, so sell it. If they get $500,000 or $700,000 for it, that’s not a taking, that’s a recession. Or, if you keep it, develop it yourself. Don’t have two layers–the university and developers–that’s a way to cook the books.”
Sowell said that Equinox Properties is the investor, not the University of Pennsylvania. “Equinox is the one who is responsible for getting both debt and equity financing. Penn’s benefit comes from a lease-hold interest. They will receive an annual payment of about $20,000. At the lease term of 45 years the property is theirs, so they have a deferred interest in whatever gets constructed on the property.”
Boni said that his clients are planning to appeal the Historical Commission’s decision to the L&I Review Board.
The five-story apartment building designed by Atkin Olshin Schade Architects was approved unanimously by the Historical Commission later in the meeting.
Atkin, Olshin Schade Architects rendering of the proposed 5-story, 122 unit apartment complex at 400 S. 40th St.
Great job SHCA. What the fuck are you here for anyway?
About time the HC accepted that this “historic” building has been trashed beyond all recognition by prior renovations. No one would have been willing to spend the money to return it to its original state – it would have remained a vacant, ugly eyesore for another several decades till in burned down or collapsed.
I think the new apartment building design is fine and will fit into the existing urban pattern very well. I do not understand why neighborhood activists believe anything over 3 floors is an out of scale skyscraper. University City is full of beautifully designed 7 – 15 story apartment buildings from the early 20th C. I don’t think anyone’s life has been destroyed as a result of them.
Go Penn!
Sloan’s design was long-gone. What the neighborhood had left was a bunker with a piece of an Italianate mansion’s façade sticking out in the middle of it. This new building looks like a mammoth improvement.
Set aside the ranting for moment and consider the law. In order for an applicant to qualify for a hardship waiver, three criteria must be met (not one, all three):
* “the applicant must demonstrate that the property cannot be used for any
purpose for which it is or may be reasonably adapted.”
* “the applicant must demonstrate that the sale of the property is impracticable,
that commercial rental cannot provide a reasonable rate of return, and that
other potential uses of the property are foreclosed.”
* “The applicant has an affirmative obligation in good faith to attempt the sale of the property, to seek tenants for it, and to explore potential reuses for it.”
These are direct quotations from city code. http://www.phila.gov/historical/pdf/Rules_Regs_2112010.pdf
When you explore the history of this case, you’ll discover something: Penn has met exactly zero of these criteria. They bought a listed historic property, came up with numbers that don’t work, and now want to tear it down. Their definition of hardship is the failure to achieve less than 11.5% return on their investment. Now ask yourselves, how many of your investments have made that kind of money? And when they didn’t, did you feel you could ask the government to protect you from a decision you’d come regret? But this is the funhouse reality we live in these days, both locally and nationally. Don’t believe me? Google “Wall Street.”
Is not the question the benefits and losses to the Citizens of Philadelphia?
Is not the purpose of zoning and other regulations to protect the interests of All who invest their lives and their moneys in City? To do so in a fair and consistent way?
Based on the illustration above, one might conclude that the new building is like the others, but it is not. As anyone who walks that block of Pine Street will discover, that illustration presents a misleading representation of the adjacent houses. In a city or town, when a person moves into or invests in a property, there is a certain right of expectation. In this case, an expectation that the block will continue to be some morph of the early street car suburb. Why else zone and have historic designations?
As it turns out, the current owner, Penn, was less than open about it’s attempts to reuse the property. At the Historical Commission it as admitted by the staff that Penn’s very first proposal was to demolish the existing buildings for the purpose of building a large hotel. As to whether the University had turned down zoning compliant offers to rehab the mansion, that remains an important question.
Cheers.
The neighbors who have opposed Penn’s redevelopment plans LIVE in this neighborhood, where Penn students also live. To add enormous density to this corner will NOT help our lives. The infrastructure is already obsolete, and Penn’s developers do not plan to do anything to improve it. Parking is already in crisis and, in fact, Penn’s largely suburbanite employees probably do nothing to remedy it. Transit oriented development is very good, when you discourage people from having cars in other ways than by coercion. I am not concerned about aesthetics, as much as I am about density and Penn’s total contempt for residents who have anchored the neighborhood against varied “animal houses” for decades. I am also quite indignant about the way in which Penn manipulates its “captive” neighborhood organization, Spruce Hill, which has simply decided it is NOT concerned with anybody living East of 42d. street. Thank you Aaron Wunsch.
“To make the numbers pencil?” ‘Scuse me? Sometimes we try too hard to impress and forget to make it clear.
So disappointing. Aaron W. makes a good point as well.
It really pains me to read some of the posts on here. The mansion is restorable! There have been several previous plans, which attest to that. It seems like every day Philly loses a little more of what makes it interesting and beautiful.
The residents are not only disrespected, but I believe it is totally illegal to ignore their complaints. When residents purchase their properties to enjoy a place, they have legal rights. Our right to pursue happiness” in a selected neighborhood with grass and trees that is more congenial to a healthy life directly conflicts with dense housing with more noise, more traffic, and water-run-off concerns. Air quality, flooding problems, and a lower quality of life must not be in favor of the Almighty Dollar.
No doubt, this New high rise has not been thought out, and conflicts with the ethical codes of the founding of Penn. Perhaps there is no longer a code of ethics.