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Klehr Harrison Aids $50 Million West Phila. Development Deal

05.18.07

KLEHR HARRISON AIDS $50 MILLION WEST PHILA. DEVELOPMENT DEAL

 

As reported in the Legal Intelligencer on April 27, 2007, Klehr, Harrison, Harvey, Branzburg & Ellers has aided $50 million West Philadelphia development deal.

 

While 52nd and Market is said to be one of the city’s deadliest corners, a joint venture at 52nd and Jefferson that has been 10 years in the making is hoped to be the revitalization that area needs.

 

The private/public/nonprofit partnership between the developer Goldenberg Group, the nonprofit West Philadelphia Financial Services Institution, and state and local agencies allowed for the groundbreaking this month of a $50 million town center.

 

Park West Town Center will be anchored by Lowe’s and ShopRite and will include a McDonald’s, Wachovia and A.J. Wright, according to Goldenberg Group’s attorneys, Bradley A. Krouse and Lee R. Sussman of Klehr Harrison Harvey Branzburg & Ellers.

 

Krouse and Sussman have been working on this deal since 2001, but the Goldenberg Group has been involved since the late 1990s, they said.

 

The West Philadelphia Financial Services Institution, with the help of the Philadelphia Industrial Development Corp., controlled a parcel of land near the 52nd and Jefferson streets site.

 

Around 1998, the nonprofit put out a request for proposal to sell the land to a developer, Krouse said.  The Goldenberg Group won the bid and originally planned on just bringing in a supermarket to the 10-acre site, he said.

 

When that proved difficult to do, given the visibility and size of the site, Krouse said the Goldenberg Group had to get creative.

 

According to Krouse, there were about 55 to 60 homes within the few blocks adjacent to the original property that the Goldenberg Group wanted to acquire.

 

Leslie Smallwood, director of development for the Goldenberg Group, went house-to-house with West Philadelphia Financial Services Institution Executive Director James R. Burnett in an effort to convince the residents to sell their properties.

 

“At the beginning, we were met with significant opposition,” Smallwood said, given that several of the residents had lived there for more than 30 years.  After about two and a half years, she said they were able to acquire all of the occupied units privately.

 

During that same time, the parties had to get condemned about a dozen homes that were vacant, Krouse said.

 

The city’s Redevelopment Authority offered its full support of the condemnation of the vacant lots, Smallwood said.

 

In addition to the original 10 acres and nearly 60 homes, the Goldenberg Group was also able to acquire a warehouse near the property, bringing the total project space to about 30 acres, Krouse said.

 

Once the land was acquired, Klehr Harrison’s work really began.  The firm had to help get the residential areas rezoned for commercial use and had to subdivide the warehouse parcel.

 

Krouse said the parties had to get five ordinances passed by City Council for the project to proceed.

 

Sussman said one of the largest elements of Klehr Harrison’s representative was through its negotiations of the lease and purchase agreements, which it will continue to work on as the project goes forward.

 

The firm also had to assist in the finance and tax aspects involved with the partnership between West Philadelphia Financial Services Institution and the Goldenberg Group.  Krouse said the two parties worked together to get government dollars for the project.

 

Smallwood said there were about eight to 10 attorneys from the firm who worked on various aspects of the project.

 

The groups broke ground on the town center in mid-April with an hour and a half spent on speeches by investors and supporters, including Mayor John Street and mayoral candidates Michael A. Nutter and U.S. Rep. Chaka Fattah, D-Pa.

 

Deal Details

The Wesgold Partnership was created as a joint venture between the Goldenberg Group and West Philadelphia Financial Services Institution.  The land is leased to the partnership, and when that lease expires, the ownership will go to West Philadelphia Financial Services Institution, Krouse said.  The lease was for just $1, he said.

 

Lowe’s, a retailer of home improvement products, owns the property on which it is located, he said.

 

About $14.35 million was put toward the project from local, state and federal programs.

 

West Philadelphia Financial Services Institution will receive 30 percent of the rental profits while the remainder will go to the Goldenberg Group.

 

The Philadelphia Industrial Development Corp. technically owned the original 10 acres of land until Jan. 31, when it signed it over to West Philadelphia Financial Services Institution, Smallwood said.  They had reserved the land for the group and helped with its original RFP almost 10 years ago, she said.

 

The West Philadelphia Financial Services Institution is a private, nonprofit corporation that facilitates economic empowerment, self-sufficiency and increased employment opportunities within the West Philadelphia Empowerment Zone neighborhood.  It provides capital, technical support and management advice to business owners.  The institution offers small business loans and other project financing.

 

Smallwood said Lowe’s should open in January 2008, ShopRite will follow a few months later, and the entire center should be in operation by May 2008.  About 420 construction jobs are expected to be created by the project, as well as 640 retail jobs, she said.