Philly residents challenge Penn's 40th and Pine development

The historic mansion at 40th and Pine Streets falls further into a complex legal battle between Penn and the community members surrounding the property.

In a Commonwealth Court case on Tuesday afternoon, the Woodland Terrace Homeowners Association and nearby neighbors opposed Penn’s plan to replace the historic mansion at 400 S. 40th St. with a five-story, 122-unit apartment complex geared toward graduate students. The hearing came out of the neighborhood group’s objection to the Philadelphia Historical Commission’s decision to approve Penn’s demolition of the property.

Despite the questionable legality of the approved demolition, many people believe that the WTHA and nearby neighbors rejected a reasonable compromise by Penn that would have saved the building — a five-story apartment complex that would have incorporated the original structure.

“Although the neighborhood group rightly objected to the legal proceedings, this group, which never publicly stated what sort of compromise it would accept, opened itself to charges of intransigence by raising vague objections about parking and density,” Aaron Wunsch, a historic preservation Penn professor, said.

Penn has faced persistent opposition from the community since buying the property over a decade ago. But like Wunsch, the Spruce Hill Community Association — originally one of the key opposition groups in the neighborhood — shifted in support of Penn’s development with the updated proposal.

“We washed our hands of this fight when Penn put a proposal on the table that would save the building,” said Barry Grossbach, zoning committee chair of the SHCA. “Besides the continuing opponents, most of the community was overwhelmingly in support of this proposal, so we really don’t know what their objective is now besides stopping anything from happening there.”

The legal case on Tuesday focused on the Commission’s 2012 decision to approve Penn’s claim of “financial hardship,” which allows an owner to demolish a historic building if the property is proven to have no valuable purpose. Attorney Paul Boni — who has represented the neighborhood group in several appeals of the original hardship finding — argued that the Commission broke its legal regulations by accepting Penn’s claim and allowing the demolition.

According to the Commission’s rules and regulations, an owner applying for financial hardship must attempt to first sell the property to prove that it has no reasonable value or potential reuse. Since Penn never put the property on the market for sale, it argues that its attempt to lease the property should count as an attempt to sell, Wunsch said.

“But the law for financial hardship requires a real life test to prove that the property actually has no useful value as it stands,” Boni said. “The applicant must attempt to sell it so that if someone does buy it, it shows that the owner isn’t really holding on to something of no value.”

Matt McClure, the attorney representing Penn, and Andrew Ross, the city solicitor representing the Commission, together emphasized the University’s compliance with the financial hardship proceedings in the Commission’s Ordinance. For a legitimate claim of financial hardship, the Ordinance requires that the building has no “profitable, adaptive uses.” In addition to attempting to lease and market the property for 10 years, Penn also hired an independent consultant, who reported that the property could not provide the 11 percent rate of return that the investor required.

“The rule isn’t as simple as just making sure the owner puts up a ‘for sale’ sign,” Ross said in the courthouse on Tuesday. “The Commission has to be the one to judge and apply operative legal words like ‘reasonable’ and ‘good faith attempts’ to this specific case, so we have used our judgment and decided that 10 years of efforts to market the property is a ‘good faith’ attempt.”

Ed Datz, the executive director of real estate of Penn’s Facilities and Real Estate Services, declined to comment while the courts consider the appeals before them, and McClure did not respond to an email request for an interview.

As both sides wait for the Court’s formal decision, the controversy surrounding the historic property becomes increasingly complex as the neighbors stress that the issue involves questions of legality, integrity and preservation of the community’s character.

“As a community resident and homeowner, I am asking a protective regulatory agency [the Commission] to protect me and the character of my neighborhood,” WTHA member Mary Daniels said. “There’s an extreme principle involved in this case; once you have a precedent of bending a regulation, it becomes much easier for this to happen again and again until the principle is lost and many more historic buildings will lose protection.”

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