Trouble is brewing again for three historic properties on the 1900 block of Sansom Street. New owners Southern Land Company and 1911 Walnut Street, LLC filed an economic hardship application with the Philadelphia Historical Commission on October 29th seeking approval to demolish the Rittenhouse Coffee Shop, the Warwick Apartment House, and the Oliver H. Bair Funeral Home. All fall within the Rittenhouse-Fitler Residential Historic District and are considered historically significant. The Nashville, Tennsesse based real estate firm led by CEO Tim Downey purchased the properties at 1906-1920 Sansom Street, and the L-shaped empty lot between 1907-1914 Walnut Street that has sat empty since 1994 after a six-alarm fire burned down the UA Eric Rittenhouse theater and Metropolitan Reporting Bureau building, for $40 million from Castleway Properties in February 2015.
Being listed on the Philadelphia Register of Historic Places confers legal protection against demolition for these properties. To prove economic hardship, according to the Philadelphia historic preservation ordinance, Southern Land Company would have to prove that “the Properties cannot be used for any purpose for which they are or may be reasonably adapted because the sale of the Properties is impracticable, commercial rental for the Properties cannot provide a reasonable rate of return, and other potential uses of the Properties are foreclosed.” However, in several recent cases, the Historic Commission has approved hardship for lower threshold claims.
In Philadelphia, Southern Land recently finished construction on a 28-story luxury apartment tower at 3601 Market in partnership with Redwood Capital Investment LLC and the University City Science Center. That project was the company’s first development project in the city. Since this summer, Southern Land has slowly been leaking plans about the Rittenhouse project: a residential tower on the Walnut Street lot extending north to Sansom Street with 102 feet of Walnut Street frontage for retail. The company previously stated that it was committed to preserving the buildings at 1906-1920 Sansom. Shortly after the deal was closed a spokesperson for the real estate firm told James Jennings, the real estate blog editor at Philadelphia Magazine, that “Southern Land intends to work with the historic commission restore the Rittenhouse Coffee Shop and Warwick.” Eight short months later Southern Land has changed its tune, implying that preservation of the iconic block was never part of the plan. It has been reported that the company began conducting drone aerial surveys of the collective parcels earlier this spring. Patrick Grossi, director of advocacy for the Preservation Alliance for Greater Philadelphia, says, “We’re certainly looking into it, doing our due diligence.”
In July, the company drew an uproar among the preservation community in Denver over the demolition of an historic 1.5-acre site in Uptown developed between 1885 and 1928 that includes a 115-year-old tavern and storefront for an eight-story, 315 unit apartment project. Similar to its strategy in Philadelphia, in Denver the company presented mixed messages about their redevelopment intentions for the historic properties before pursing demolition.
Yesterday, the company released an official statement to Hidden City addressing the hardship application. “At Southern Land Company, we strongly support historic preservation efforts. Regrettably, after extensive investigation of the buildings located at 1904 Sansom Street, 1906-16 Sansom Street, and 1918-1920 Sansom Street, we have concluded that the buildings are in extremely poor condition, with serious structural, material, mechanical, and environmental problems, and pose significant safety concerns. As such, on October 29, an application was submitted to the Philadelphia Historical Commission to approve the demolition of the three buildings due to the financial hardship associated with the inability to reasonably reuse the buildings. We are working closely with the Center City Residents Association task force, Rittenhouse Plaza, city officials and other stakeholders including businesses, preservation and neighborhood associations to achieve a result at the property that will be of maximum benefit to the community.”
It isn’t clear why the building issues weren’t uncovered during the due diligence phase of acquisition. Moreover, one test of hardship is that the developer can’t market the property. But Southern Land’s own acquisition of the site is proof of its marketability as is.
To support its hardship claim, the company cites an environmental report by the engineering firm Pennoni Associates, which states that the cost of remediation for the three buildings (removing asbestos-contaminated material, lead based paint, pigeon guano, and mold blooms) would require an estimated total cost of $1,610,000 (Rittenhouse Coffee Shop: $49,030, Warwick: $1,455,470, Bair Funeral Home: $105,500).
Solomon Cordwell Buenz Architects, which performed reuse scenarios for the properties, concluded that redevelopment of the properties did not create enough value to justify costs. Scenarios for the reuse of the coffee shop and funeral home as retail space, single-family dwellings, and offices hovered around a $3.5 million loss. The report alleges that redeveloping the Warwick for apartments, condos, offices, or a hotel would incur $17.8 million in lost revenue. It isn’t clear if “lost revenue” is an opportunity cost for not developing a cleared site or an actual cash loss on investment.
In its Structural Condition Assessment Report, Keast & Hood Structural Engineers assessed that all three buildings are in “very poor condition” and suffer from water infiltration, advanced wood decay, masonry deterioration, decaying wood joists, significant mold, and overall building material moisture saturation.
Southern Land concludes in its hardship application that adaptively reusing the buildings is cost prohibitive. The company would incur a significant economic loss if preservation and redevelopment were undertaken, it claims. It maintains that demolition of all the buildings is appropriate and necessary. In doing so the company would free up roughly an acre of connected, open parcels–an attractive footprint for a developer to own in the heart of Rittenhouse Square.
The “Sansom Three” has been to this rodeo before. In 2003, the Historical Commission approved demolition of the three buildings in favor of a $35 million development plan proposed by former owner Philadelphia Parking Authority. The proposal included an eight-screen Ritz movie theater, 500 space parking garage with 6,000 square feet of street level retail, and a 1,200 square foot restaurant. Only the ornate, terra cotta façade of the Rittenhouse Coffee Shop was required by the Commission to remain and be incorporated into the design. The full Commission’s decision ignored the advice of both Historical Commission staff and the Commission’s Architectural Committee, which had recommended that the demolition request be denied.
The Philadelphia Court of Common Pleas repealed the Commission’s approval in 2005 after the Preservation Alliance for Greater Philadelphia and real estate investor Michael Singer filed an appeal. In his decision to reject the PPA’s development plan, Judge Matthew D. Carrafiello wrote that demolishing historically significant buildings was not in the public’s interest and that economic advantage was not enough to overrule the city’s historic preservation ordinance. “Virtually any historic building in Philadelphia could be demolished when a more economically advantageous use could be foreseen,” wrote Judge Carrafiello.
Castleway Properties of Ireland bought the properties from the PPA in 2007 for $36.7 million with plans for a 50-story mixed-use tower that included 150 condominiums, ground floor retail, and a hotel. The project stalled with the onset of the economic crisis of 2008. Despite the Pennsylvania Horticultural Society’s pop-up garden on the site in 2012 and Toll Bros. interest in developing the empty parcel for a hotel and condominium tower in 2013, the properties and lot have sat vacant since.
At the time of this story’s publication, Historical Commission officials stated that they have not begun reviewing Southern Land’s hardship application.
Asbestos abatement should not be factored into any hardship claim as it needs to be abated regardless!
What a bullsh*t hardship claim. Environmental work is always expected – and the abatement will need to be conducted EVEN IF DEMOLISHED. Any structural repairs should not be a surprise as they have sat vacant for so many years. SLC bought the property knowing they were historic and they would need to be preserved. Demolition saves them money – but really gives them the flexibility to design a more efficient tower (to make more money). That’s their goal. And I’ve lost all respect for this developer who I thought was ready to grow up from their big box suburban junk. It would be interesting to see if their architect was even working on plans that included preservation of the buildings.
This is bull. Asbestos has to be abated either way. The buildings, especially the coffee shop, are important links to the history of the city. $1.6M is but a drop in the bucket for a Rittenhouse condo building. What would that be 1 maybe 2 condos?
Years buildings has become vacant and why has nobody stepped in to buy them and try to renovate them? Only Castleway (sidetracked due to recession in 2008) and now Southern Land Company. If the buildings must come down, efforts must be made to salvage good materials before the rest of the buildings are torn down. Such can be incorporated in future buildings or housing.
I smell BS. No company buys without doing diligence on the property and determining all potential uses. Furthermore, no lender would ever give a loan without determining whether the collateral could indeed pay back the loan with the expected uses. I am sure they were just counting on the pushover historical commission to let them demolish this and convinced the lenders that this would be a breeze. $1.6 million environmental remediation is not that much, if they could sell each condo for a million or more. Ugh.
The same old crap and lies from the Developer’s Playbook. Acquire historic buildings, purposely abandon them while leaving them exposed to the elements, until you can claim they are rotten to the core and must be demolished. Developers must be punished for ruining our historic buildings in this way. These buildings should be converted to housing and recital space for musicians. They can build around them. The Warwick was one of the few apartment buildings with generously sized apartments and, presumably, an elevator. The funeral home could also be home to a synagogue or such, I presume.
No, the new owners must be made to clean out the buildings and turn them over to nonprofit use. The Parking Authority had no business selling these to a developer. Especially when the William Penn Foundation was trying to find locations for artists housing.
“Economic hardship” is total bull. They knew exactly what they were getting themselves into before and when they purchased the building. And I agree that the cost of remediation relative to what these units are going to sell for is nominal. Philly as a whole needs to push back on these kinds of projects! What is the point of historic registration if we end up getting pushed around by developers and their [financial] agendas and allow them to demolish these buildings? Not to mention the main site for this project is a gigantic vacant lot, so they will automatically have new construction there. Let’s be honest–THEY HAVE THE MONEY to rehab the small existing buildings and do their part in respecting the historical and cultural value of the neighborhood. Don’t let what happened to the Boyd Theater happen again and again…
The comments above are so correct. I really hope the Historical Commission starts fighting for our city’s built environment. At minimum they need to save the facades.
This makes me very sad.
I’d like to know more about the historical commission — who’s running it, and more specifically what can be done by the public to see to it that they start raising the threshold for hardship back where it belongs. At the rate they seem to go Independence Hall will be the only piece of Philadelphia history left.
Isn’t it bad enough that we lost the Boyd? This is still another travesty brought to you by Historical Commission…Take a look around we are losing everything that speaks of our past.Can we please retain a few precious moments in our past?
No,No, No!!!! Say it ain’t so!!!
Please take note the 2nd Fret was located in the nondescript building next to the Rittenhouse Coffee Shop. 1902 Sansom Street is the address listed in newspaper ads and fliers. The address was confirmed by a friend, a former jazz musician, who used to hang out there. He shared that what happened behind the then-red door was magical. There were poets and folk singers. It was the spot. Jazz was the center of everything that happened there.
The 2nd Fret was Philadelphia’s premier folk club. It played host to folk singers and jazz artists who went on to greatness, including Joni Mitchell (who recorded “Live at the 2nd Fret” in 1967), Arlo Guthrie, Norman Connors, Brownie McGhee & Sonny Terry, and Richie Havens. Artists returned to the small club over and over because they wanted to make sure it survived. Will this intangible cultural asset survive Philly’s culture of demolition?
All That Philly Jazz
Would love to see pictures of the interior. Do any exist?
I have a few from 2007 or 2008. The inside had been pretty well cleaned out and I was not inspired to shoot more.
“Economic hardship” as a policy would take very little work to make into a blank check. All you would have to do is figure out how much in rent the various possible uses would bring in as the property currently stands, and then overpay for it according to that income– but not overpay according to the income of what you wish to build there. By that method you can cause your own “economic hardship” artificially. Are you taking your chances it’ll get turned down? Sure, but how often does that actually happen?
If it’s a multiple property deal, or one with a longtime trading partner, you could even _not_ overpay in reality, just in accounting terms: simply arrange the deal so that you “overpay” for these properties, in accounting terms, but “underpay” accordingly for other properties sold by the same seller. All it would have to be is within some sort of realistic range for it to pass scrutiny. This might also have the effect of inflating real estate prices, which might seem like a good thing, but as we saw in ’08, not when it’s based on something other than economic reality.
I’m not saying that all this is what is happening here. Not having any connection to the situation, I wouldn’t have any way of knowing. But “economic hardship” as a policy is far too easily gameable, in the ways I’ve cited, and the rules surrounding it should be changed accordingly.
Lets not forget this is the Historical Commission in the City of Philadelphia. Where they allowed the Boyd to be demolished but saved it facade, ignoring the fact the Boyd’s significance was its breathtaking Art-Deco interior and artwork in its theater and the fact it was the last remaining historic downtown theater remaining.
This is the Historical Commission which, in the city that built a statue to Rocky is happy to let the Blue Horizon have it’s interior demolished while saving the exterior, again missing the point it is the interior that was the historically important part. The Blue Horizon was known in boxing circles as the greatest venue in the country, if not the world.
BUT they give the PSFS owners a world of hell because they wanted to replace the PSFS sign with a newer LED system to replace its falling apart neon system.
They really pick odd battles to fight.
A company can simply walk out of the deal if the Historical Commission does not approve the demolition. Then it will be left fallow unless somebody wants to buy and throw lots of money in upgrading it for commercial purposes which will be very narrow as they will be limited to what they have created on site from existing building vice new construction. The Boyds is one recent example and it was given demolition approval contingent upon preservation of the existing façade. Façade preservation could be required to incorporate new construction of condos while still maintaining a reminder of the building that was there before.
Once again a developer/developers buy properties, let them sit and rot, then claim they’re in poor condition and can’t be saved. Bullshit. Like previous comments mentioned, the most recent purchasers KNEW what they were buying and now they can’t do anything with these properties? For apparently very wealthy companies and probably very intelligent people, they have made some really very stupid business decisions. “Hardship From Neglect” should not be criteria for tearing down anything a developer wants. No one forced them to buy these properties now they want demolition? Of course, they need a subsidy from the City and State to make their project “work” as well!
This is ridiculous. $44M for the outlay of the acquisition – not to mention assumed development costs of a highrise tower and you are going to tell me $1.6M is going to break the project? Get the f outta here.
Sam Rappaport is long gone, but demolition by neglect lives.
Disagree. The mere fact that Southern Land Company bought the property does not prove its marketability for historic adaptation/re-use. If I understand correctly the buildings have been vacant since 1994. I haven’t heard clamoring (or any interest at all) from developers in rehabbing these buildings. Perhaps it was only a good buy from SLC’s perspective under the assumption that it would demolish the buildings. Let them make their case to the historic commission and perhaps some compromise can be reached.
I walked past there the other day and saw a notice on in that public hearings on its demolition had been postponed, and for more information to go to phila.gov/historical, but when I did, I had trouble finding information about specific building hearings. Does anyone know any updates about this? I love this building and would be so heartbroken to see it destroyed!
CORRECTION: The 2nd Fret was actually at 1902 Sansom, which has since been incorporated into the adjoining Sophy Curson dress shop.
I agree with all previous comments posted here. If future generations can see this, and the same thing is happening in their time, then chain yourselves to the buildings because Developers lie and Commissions only care about their seat at the table.